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UK advisers see biggest increase in DB transfer demand

UK advisers see biggest increase in demand as international advisers fear DB scheme security.

Advisers are predicting demand for defined benefit pension transfers to increase by a third in the next 12 months.

IFAs say that fears over DB scheme longevity and improved transfer values are the most important drivers of demand, according to a survey of advisers from across the UK, Europe, Middle East and Asia by Old Mutual.

UK advisers thought the pension freedoms were a more important driver of DB transfer demand than their international counterparts, with 91 per cent of them attributing the increase in demand to the reforms.

UK advisers also said they had seen the biggest growth in demand for DB transfers over the last year. 54 per cent reported a “significant” increase in demand, and more than two thirds expected demand to increase over the next 12 months.

DB transfer numbers hit 80,000 in one year

Old Mutual Wealth head of international technical sales David Denton says: “UK based advisers have previously been fairly cautious when it came to DB transfers, as decisions were seen as high risk and irreversible.

“With 71 per cent of UK advisers saying they expect demand to increase, we may be seeing the tide turning, with more advisers prepared to take on such cases.  It is important advisers continue to assess each case on its own merits as defined benefit transfers will not be suitable for all clients.

“Following the Election in the UK, with the Conservatives now operating a minority Government, pension issues are likely to have slipped down the agenda. There is a risk the response to the [DB] Green Paper could be pushed out, but the area of DB pension funding and transfer suitability remains a crucial issue and it is important this remains on track.”

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