Personal PensionAug 25 2015

More client requests for DB reviews, yet few transfers

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More client requests for DB reviews, yet few transfers

More people are looking to review their defined benefit scheme following the introduction of the pension freedoms, although providers told FTAdviser that only a handful have resulted in an actual transfer.

Data published today (24 August) by investment software provider Selectapension showed that twice as many people looked to review their defined benefit scheme in the three month period following the introduction of the pension freedoms, compared to the same period a year ago.

As a consequence of the pension freedoms, anyone with a DB pension pot worth more than £30,000 has to receive regulated financial advice.

Old Mutual Wealth told FTAdviser that the number of transfer value analysis requests received in the period from April to July was up 83 per cent on the equivalent period in 2014. However, only one in seven resulted in a completed transfer in the period across 2015.

However, a spokesperson for Zurich said they have not seen a “material increase” in DB to DC transfers since the freedoms were introduced.

Jamie Jenkins, head of pensions strategy at Standard Life told FTAdviser: “We have seen an increase in interest in recent months from people exploring the options for transferring their DB pension, similar to advisers and other providers.

“However, it has yet to be seen the extent to which this translates into actual transfers, given that many people are put off by the requirement for advice, or indeed advised not to transfer.”

John Lawson, head of policy at Aviva, said in some of the defined benefit schemes Aviva administers there has been an increase of around a third in the number of people putting in DB to DC transfer requests.

He said: “However, the numbers involved are still relatively low – requests have come from less than 2 per cent of the members of those schemes.”

The data from Selectapension also showed that advisers have been reviewing requests from clients in an older demographic, compared to last year. The research showed that in 2014, 59 per cent of DB reviews were for those over age 50, rising to 77 per cent in 2015.

Selectapension said this suggested an increase in people approaching retirement exploring their options and potentially transferring out of DB schemes.

Andy McCabe, managing director of Selectapension, said that while the freedoms have started to make an impact on consumers, “it is important to recognise that transferring from a DB scheme is not suitable for everyone and a decision as complex as this should not be made hastily but with comprehensive financial advice”.

FTAdviser previously reported on a number of cases where advisers have been asked to write letters to unlock DB transfers where advice has not been given. The FCA warned providers to be alert and the Department for Work and Pensions said trustees should check claims of advice.

ruth.gillbe@ft.com