St James’s Place (SJP) has created a defined benefit (DB) pension transfer guide that it will start giving out to all clients.
Ian Price, divisional director for pensions and consultancy at SJP, said this booklet contains information on the reason for and against a DB transfer, and it will be given to individuals in the first meeting they have with an adviser regarding such a transaction.
The brochure also explains the financial concepts involved in DB transfers, and signposts the clients to speak to their advisers in case of further questions.
Following the introduction of pension freedoms in 2015, DB pension transfers have been soaring, as savers seek to take advantage of sky-high transfer values and to move their nest eggs into defined contribution schemes in order to access their cash.
Figures published by Mercer in April showed as much as £50bn has been pulled from final salary pension schemes in the past two years.
Meanwhile HM Revenue & Customs data showed more than £14bn has been unlocked from DC pensions since pension freedoms came into effect.
But SJP didn’t disclose the number of pension transfer requests it has received during the past year, as the firm is in its reporting period.
Mr Price said transferring out from a final salary scheme has to be “an individual decision based on individual circumstances”.
He said: “I’m paranoid about that. That is why we check all of the advice [we give] before signing off.”
The suitability letter given to SJP clients will also make mention to the guide, he added.
Information about DB transfers is already available on the websites of guidance bodies Money Advisory Service or The Pensions Advisory Service.
But Mr Price argued that SJP’s guide is tailored to its clients, and that it is different to have a physical brochure instead of having to search for this information.
He also said that “information is a little bit scattered in several places” when it comes to the guidance bodies.
Steve Carlson, a chartered financial planner at Cardiff-based Carlson Wealth Management, said “guides are great for a compliance trail, marketing and for those prospective clients who want to read them”.
He said: “Most people I meet, though, suffer from information overload, and need an adviser to explain all of the paperwork they already have, and to advise them on how it effects their own situation.”
Gem Durham, independent financial adviser at Obsidian, said “anything that gives unbiased good quality information to assist people in making well informed decisions - on what will undoubtedly be one of the biggest if not the biggest financial decision they will ever make - has got to be a good thing”.
She added that Royal London has also produced a guide on this topic.
She said: “It’s readily available on-line I have had a couple of clients present it to me to show me they really have given the subject a lot of thought and have done their homework.”
maria.espadinha@ft.com
