AJ Bell 

Platforms clash over whether DB transfers have peaked

Platforms clash over whether DB transfers have peaked

AJ Bell and Aegon bosses are divided over whether platforms will continue to see loads of defined benefit pension transfer cash coming their way in the next 12 months.

Andy Bell, chief executive of AJ Bell, said in recent years platforms have been one of the main beneficiaries of the soaring volume of defined benefit pension transfer activity as a result of pension freedoms.  

Pension freedom gave savers in defined contribution pensions the right to access their funds in any way they like from the age of 55.

But the freedoms were not extended to savers in DB schemes meaning those in final salary schemes had to transfer their pots to defined contribution plans to access their cash.

However Mr Bell said AJ Bell has recently seen a steady decline in the amount of DB pension cash it receives and claimed the peak of transfer activity, seen in financial year 2017, has now passed.

Mr Bell said he expected the amount of pension transfers to continue to decline.

But Steve Cameron, pensions director at rival platform Aegon, said he expects the volume of clients requesting a pension transfer to increase in 2019.

He said: "The consensus across the industry is that the number of DB transfers taking place has slowed in recent months.

"This may reflect the relatively new FCA regulations alongside their latest suitability review and issues with obtaining professional indemnity insurance cover.

"The FCA publications do set out much more clearly what the FCA's expectations are for DB transfer advice, which significantly reduces the risk of future advice being found unsuitable.

"We expect to see advisers regaining confidence in advising in this area and we also hope PI insurers begin to reflect the lower risk in premiums.

"Over 2019, we expect to see greater volumes of DB transfer advice and while advisers will exercise caution, this will result in higher transfer volumes." 

Ian Taylor, chief executive of Integrafin, the parent company of the Transact platform, said longer-term he expected his business's growth to be underpinned by more people seeking advice.

He said demand for advice was soaring as investment options become more complex, and financial planning becomes more important, particularly with the shift from defined benefit to defined contribution pensions.

Alastair Cunningham, an adviser at Wingate Financial Planning in Surrey, said he has noticed a significant drop in interest from clients wanting to transfer from a defined benefit pension.

He said: "The main reasons would be the tide of popular media has turned from being significantly and illogically pro-transferring to being either neutral or negative.

"The other reason is that the tip of the mis-selling iceberg is starting to rear its head, and advisers and consumers alike are starting to realise that most people should not, and should have not, transferred."

Scott Gallacher, adviser at Rowley Turton, in Leicester, said: "There has definitely been a reduction in the number of DB transfer enquiries.

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