They said: “So the predicament that we have is trying to find an adviser who will look at the situation (given that we have to take advice) and not demand an exorbitant fee for this or the transfer, should that proceed. That seems to be extremely difficult given that we have had some eye-watering sums quoted to us so far. It also appears we are far from alone in finding difficulty in trying to achieve what we believe is the sensible thing to do with my wife’s pension fund.”
Indeed, I know someone – a close friend – who wanted a DB transfer. He was adamant that all he wanted from an adviser was the transfer transaction (as prescribed). This was not acceptable to some of the advisers contacted, even when my friend said he wanted to see how they worked and might contract for the full service if the relationship was a good one.
In the past couple of months we have had guidance consultation 17/1 from the FCA, with proposals for updating the methodology used to calculate the redress owed to consumers who were given unsuitable advice to transfer out of DB schemes. In January we had an FCA update stressing that over-emphasis on the critical yield was not good. It said consideration needed to be given to whether the defined contribution (DC) investment decision was capable of meeting the critical yield (in line with the client’s attitude to risk).
This is a start, but there are other changes that would assist.
First, I would like to see the regulatory presumption that such transfers are always unsuitable removed, such that all cases can be considered on their merits and in line with the changing and specific client requirements. This might assist in the regulatory process going forward.
Next on my list would be a review of the whole TVAS procedure and the underlying assumptions. Many complain about the relevance of a critical yield that produces the growth rate needed to match annuity purchase at the normal retirement date of the scheme, particularly as many people will opt for income drawdown.
