St James’s Place has defended seminars it hosted for British Airways pilots that resulted in people transferring out of their defined benefit pensions.
SJP has faced questions from MPs on the work and pensions select committee about its work with BA, after a letter from the Trades Union Congress last month suggested the advice firm was promoting pension transfers at the events.
In the letter, TUC policy officer Tim Sharp said the British Airline Pilots’ Association reported that during last year’s consultation process to close the New Airways Pension Scheme to future accrual, SJP advisers were “very active” in trying to promote transfer values, which were not promoted by the employer.
Committee chair Frank Field then wrote to SJP chief executive Andrew Croft asking for more information including about how the seminars are publicised, what proportion of attendees transfer their pension, and whether SJP holds similar events with other companies that have DB schemes.
In his reply, Croft says that one SJP advice firm has developed close relationships with BA staff and started working with the company’s pilots in 2002.
He says: “The relationship between the SJP adviser and members of the British Airways Pension Scheme is not typical within our business and exists for reasons that are specific to that scheme and the needs of some of its members.”
Croft is clear the sessions “in no way” promote or are designed to promote transfers.
He says in the letter: “These have now been running for the past nine years and it is therefore also important to note they were not established in response to the closing of NAPS announced at the end of last year.”
The letter says that since 2009 there have been 44 pension and taxation briefings that have been attended by 353 pilots and senior managers. Of those, 58 (16 per cent) have arranged a transfer through SJP with 7 per cent transferring within a year of attending the seminar.
The seminars are run by the SJP adviser and SJP’s group pensions head. They are held in a Hyatt Hotel and last for several hours.
Croft says the closure of the scheme has not resulted in any change to the frequency of the briefings or the way they are run.
Since November last year, there have been three briefings with 28 attendees and, at the time of the letter, none had arranged a transfer but there are two people who are taking advice with a view to transferring.
Croft says in the letter people who attend the seminars are told they must get regulated advice.
Croft says: “Where clients are provided with personalised financial advice through a follow-up meeting, we make it clear that SJP advisers offer restricted advice.”
The BA scheme is “generally” positioned as gold-plated to people who attend the briefings, Croft says, and they are told about the advantages of the scheme, spousal benefits, and how it provides retirement income.
The seminars are publicised through one of SJP’s firm’s websites, through an online service accessible only by BA pilots, and through a BA pilot forum hosted through BALPA.
Croft says SJP’s position is that DB transfers are appropriate only in a small number of cases.
In an appendix to the letter, SJP says the FCA included 65 of its cases in its suitability review in May 2017, with 93 per cent of the cases found to include suitable advice.
The appendix says: “In addition to this wider review of advice, the FCA has reviewed a small number of defined benefit transfers advised on by [SJP] and has found them all to be suitable.”
Last December, SJP said it would no longer accept new DB transfer requests from British Steel Pension Scheme members.