One of the greatest challenges facing the UK as the millennium approaches is support for its ageing population. It is already becoming clear that ensuring that individuals are self-sufficient in retirement is high on the Government's agenda.
Consumer surveys still show a worrying lack of knowledge regarding the question of post-retirement provision and, more worryingly, a lack of interest. An education campaign among the general public must be on the Government's list of priorities.
The ability of financial advisers and planners to give sound pension advice to a growing number of clients with increasingly complex financial circumstances will be paramount. Against this background of urgent need, increasing regulation in financial services generally and of misselling scandals in the pension area in particular, the PIA has ruled that any company giving pension transfer or opt-out advice must have at least one appropriately qualified specialist by March 31, 1999.
Pension transfer advisers faced with satisfying these regulatory requirements within the deadline may be tempted to rush into an examination in the hope of putting it behind them as soon as possible. However, they would be well advised to investigate all the qualification options to ensure that they choose the route that best suits their approach to study.
The practical alternative route to satisfying the regulatory requirements is the pensions module of the Professional Investment Certificate (PIC). This qualification, which builds on the regulatory qualification Cefa or its alternative the FPC, is a university-validated alternative to the AFPC.
Offered under the auspices of the Institute of Financial Services, a subsidiary of the Chartered Institute of Bankers, PIC was launched in June 1996. A growing number of organisations are now embracing it as their preferred practical route for qualified advisers.
In 1997, the PIC pension module was approved by the PIA as satisfying their requirements for those offering pension transfer advice. One upshot of this is a compulsory pension transfer question within each PIC pension examination. The syllabus approved by the PIA is broadly similar to the AFPC's G60 and provides full coverage of all transfer questions.
However, the product offered by the IFS is more applicational – it aims not only to impart information but also to ensure that the student understands how this information is used in the real world.
Thus, the emphasis of the module – as of the qualification as a whole – is on the practical application of knowledge and relevance to the workplace, as opposed to theory.
The examination is intended to test the adviser's ability to give appropriate advice rather than simply to test an ability to memorise facts.
Advisers generally need to allow around 180 hours to study for the PIC pensions paper and a flexible study structure is available. The IFS publishes self-study tuition material, including an examiner's report, for each subject but buying this is optional (some students prefer to enter the examination only and seek their study support from elsewhere, for example, in-house training). The institute's study material for PIC pensions (and for all PIC subjects) covers the entire syllabus – no additional reading is required although always advisable.
Candidates will be expected to show an understanding of up-to-date industry events. The study material also reinforces the applicational nature of the subject. For example, one section, called Pensions Planning for the Individual, has a number of technical units but aims to use this information learned through looking at interaction with real-life situations.
The PIC pensions paper is assessed through one three-hour examination. To pass the paper, candidates must complete a combination of short compulsory questions to test knowledge and understanding, and questions based on case studies to test its application. The paper comprises three sections:
Section A – consists of one compulsory pension transfer question worth 25 marks. Candidates must achieve a minimum of 13 marks in this section.
Section B – consists of five short compulsory questions worth five marks each.
Section C – consists of three questions worth 25 marks each. Candidates must attempt two questions from this.
The Institute of Financial Services has also put together a support package to help advisers who are working towards this qualification. The package comprises:
Revision notes booklet, with additional self-assessed questions.
Two assignments, including questions involving pension transfers.
Examination sessions for PIC are held
twice yearly in May and October. However, the IFS recognises that advisers will need maximum study time to increase their chances of passing first time.
It has arranged for a special additional examination session for the pensions paper in February 1999 in locations around the country. Results from this session will be available before March 31, 1999 in order to satisfy the regulators.
To achieve PIC itself, candidates must pass (or be exempted from) three out of seven papers. The papers comprise:
Personal Investment Planning and Advice.
Band A – at least one from:
Business Investment Planning and Advice.
Offshore Investment Planning and Advice.
Operating in a Regulated Environment.
Band B – no more than one from:
Customer Services – Marketing and the Competitive Environment.
Independently benchmarked at first-year undergraduate degree level (through the institute's partnership with Umist – the University of Manchester Institute of Science and Technology), PIC offers financial advisers an attractive practical alternative to the AFPC and PIC pensions is a well-supported alternative to G60.
Advisers wanting to find out more about the PIC route to satisfying the regulatory requirements should contact the institute on 01227 762600.