Tideway Investment Partners says its activity with two defined benefit pension schemes has been “misunderstood and exaggerated”, in a letter to an MP committee.
Tideway managing partner James Baxter has responded to questions from the work and pensions select committee about the promotion of DB transfers among employees at energy giant EDF and Magnox Electric Group.
Tideway was mentioned in a letter to the committee from the Trades Union Congress in June, which union Prospect said Tideway was “proactively contacting workers” at those companies.
Responding to the committee’s questions, Baxter says Tideway hosted free seminars that were open to the public, but that contact with DB scheme members was through referrals or approaches by members themselves.
He says the location of the seminars is influenced by which workplaces have a high concentration of DB scheme members.
Baxter adds: “We have from time to time presented DB transfer seminars at venues that are easily accessible to those individuals in those schemes. Otherwise, we tend to pick a spread of locations throughout the country close to major conurbations.”
Seminars have been held in London, Bristol, Manchester and Ashford.
The committee asked Tideway how the seminars were publicised among scheme members; how referrals are generated; the proportion of attendees who arrange a transfer; and the way Tideway communicates the benefits of retaining safeguarded entitlements in a DB scheme.
According to Baxter’s response, 26 members from the EDF/BEGG DB Pension Scheme, and three members from the Magnox scheme had completed or are in the process of completing transfers with Tideway.
The average value of the transfer from the EDF/BEGG scheme was £1.2m while the average value from Magnox was £770,000.
Baxter says: “Members who transferred with us from the EDF/BEGG scheme in 2016 are materially better off today than they would have been had they stayed in the scheme under any reasonable set of assumptions”.
This claim, he says, is evidenced through a combination of the scheme early retirement factors, the scheme tax free cash commutation factors, annuity costs falling and investment returns made to date.
On the seminars, Baxter says: “We never contact members directly or proactively, we work only on referral.”
However, he says the seminar details are published online and the firm emails its existing customers letting them know times and dates.
Baxter adds: “About 400 people have attended from all schemes and all our seminar activity. To date around 15 per cent of those attending have gone on to complete transfers with us.”
Baxter says the benefits of staying in a DB scheme are communicated to members at the seminars.
He says: “I start all seminars with a clear explanation of the transfer of risks and responsibilities that come with the transfer of cash in a DB transfer.”
He adds: “I make it abundantly clear that the default position is to stay in the scheme and only where there are significant improvements to the members’ financial and a sensible plan for safeguarding the money post-transfer does it make sense to consider a transfer.”
Baxter dismisses any claims of financial interests for Tideway advisers advising clients who transfer from DB schemes.
He says: “Tideway transfer advisers are fully employed with generous basic salaries and categorically have absolutely no financial interest in whether the individuals they advise transfer or not.”
St James’s Place chief executive Andrew Croft has also defended seminars it hosted for British Airways pilots that resulted in people transferring out of their defined benefit pensions.
SJP responded to questions from the committee where it also revealed 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.”