Defined Benefit  

DB transfer values reach 54 times annual pension

Glasgow-based IFA Allan Maxwell of Corporate Benefits, takes issue with Mr Adams comments.

Mr Maxwell said: "One of the key determinants of the transfer value is the age of the client. The younger the client, the longer the discount period and the lower the multiplier.  

"While a multiplier of 11 is low it does not necessarily mean that the transfer value is measly. It is more likely to reflect a poorly funded scheme and an employer with a weak covenant and is potentially a scheme destined for the Pension Protection Fund.

"I would also say that we have not seen a bias towards financial services clients. Our experience is more along traditional lines where a client refers a friend, relative or colleague."

The Financial Conduct Authority outlined plans to shake-up the rules for pension transfer advice in a 65-page consultation paper published last week. 

The FCA intends to add a requirement that advice on conversion or transfer of safeguarded pension benefits must now include “a personal recommendation”.

The regulator stated if advice does not include a personal recommendation “it won’t provide appropriate protection for consumers.”

The watchdog stated: “In view of the complexities when considering a conversion or transfer of safeguarded benefits we think that, for advice to be meaningful, it is important it looks at the consumer’s individual circumstances and provides a specific recommendation. 

“The merits of transferring or converting safeguarded benefits are highly dependent on an individual’s personal circumstances. 

“To make informed decisions, consumers need to understand the specific details of their safeguarded benefits, make an assessment of the value of this benefit for their specific circumstances and compare this to the value of alternative options.”

Figures from The Pensions Regulator found that up to 80,000 defined-benefit pension transfers were made in the year ending 31 March.

stephanie.hawthorne@ft.com