Tisa proposes new DB transfer guidance service

Pension Wise style guidance sessions to be trialed on “medium-sized” DB transfer pots.

MMI 2016
MM editor Natalie Holt opening the MMI conference

Tisa is to trial guidance sessions for defined benefit pension scheme holders who want to transfer out but fall below the £30,000 threshold for compulsory advice

Speaking at the Money Marketing Interactive conference in London, Tisa director of retirement Adrian Boulding said the cross-industry group hopes to run a controlled pilot of a guidance scheme at some point after the general election on 8 June.

As part of a session on the politics of pensions in the era of freedom and choice, Boulding said Tisa is interested in whether there is a “medium-sized” transfer value that would be subject to guidance before transferring.

He says: “[At the moment] if you have got a small transfer value, which today we define as under £30,000, then if you are up to it you can do it yourself, you can do execution-only and that is allowed. If you have got a large transfer value, which is defined as over £30,000 you need to find a regulated adviser to persuade them to give you the advice.”

Boulding adds: “Maybe there is a medium-sized transfer value that could be done on guidance. A full guidance session, not unlike the Pension Wise sessions – a Pension Wise telephone session lasts between 40 and 50 minutes. Explaining to people what the issues are, checking they have understood the issues and giving them a certificate to say they have had some guidance might unblock the logjam we have got in the DB transfer market.”

He says Tisa has been “encouraged” by The Pensions Advisory Service on the idea.

A Freedom of Information Act response revealed last week that The Pensions Regulator estimates a total of 80,000 transfers were made from defined benefit pension schemes over the past year.

Advisers welcomed the guidance trial idea but questioned whether it might repeat the service that is already offered by TPAS.

Red Circle Financial Planning director Darren Cooke says: “Anything that will enable people to make a more informed choice with their pensions is a good idea. It should extend to all pensions but DB has got the particular issue that if it is under £30,000 they don’t have to take advice but perhaps should.”

He adds: “Is it not going to repeat what is already being done by TPAS? How will you reach the people, what is the cost, will you do it on an individual basis or a group basis. It is a nice idea but I am not sure about the logistics.”

Wingate Financial Planning chartered financial planner Alistair Cunningham says DB transfer guidance could also be valuable for people who are above the £30,000 limit.

He says: “Irrespective of whether someone needs advice or not, helping people to understand the benefits they have got is a very good idea. The issue with benefits under £30,000 limit is they will only be about £1000 per year final salary pension so the scope for harm is a lot less which is why the limit is as it is.”

Cunningham adds: “I don’t see why it wouldn’t be extended to people who have got larger values. Have some free guidance before you go down the route of chargeable transfer advice. If the advice is going to tell you not to transfer wouldn’t it be good to know that up front before you undertook chargeable advice.”

Catch up on more of our coverage from MMI here.


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There is one comment at the moment, we would love to hear your opinion too.

  1. At the end of the day many advisers either aren;t going to offer advice on modest pots, or the cost of that advice will be prohibitive. As such any additional options should be welcomed

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