Consultation over DB to DC transfer advice

Consultation over DB to DC transfer advice

The FCA has launched a consultation on new rules surrounding transfers from DB to DC pension pots.

As part of the government’s reforms, consumers will be required to take advice before transferring out of a DB scheme and it will be the responsibility of trustees to check people have done so.

The proposed rules will mean the FCA will require those advising on pension transfers to have the specialist qualification.

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Scheme members seeking a conversion or transfer will need to provide a letter from their IFA as proof they have taken advice.

Christopher Woolard, director of strategy and competition at the FCA, said: “The new pension flexibilities bring about added choice for consumers.

“DB schemes pose particular issues and we need to ensure that those who are considering moving away to other arrangements are fully aware of the potential benefits they are giving up.

“In many cases transferring from DB to DC may not be in the member’s best interests and ensuring independent advice is taken is an important protection.”

The advice requirement will not apply if the pension benefits in the scheme are less than £30,000 or if the benefits are used to buy an annuity.

The consultation runs until 15 April.

Adviser view

Peter Chadborn, director of Essex-based Plan Money, said: “This is perfectly sensible. There are layers of complication within DB schemes that don’t exist in DC arrangements and the person advising on it should be suitably qualified.”