Defined Benefit  

SimplyBiz firm refuses pension transfers under £400k

SimplyBiz firm refuses pension transfers under £400k

PensionHelp, one of three defined benefit (DB) transfer partners used by SimplyBiz, will introduce a £400,000 minimum case size from 1 February onwards due to "ongoing demand".

In an email sent to financial advisers yesterday (25 January), Gary Kershaw, compliance director of SimplyBiz, said that “this is only a temporary measure to enable PensionHelp to effectively manage their existing workload”.

In the document, seen by FTAdviser, Mr Kershaw argued “client demand for advice on DB pension transfers continues to rise” and PensionHelp’s decision has been made with SimplyBiz full support.

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The goal is “to ensure that those with cases already in the pipeline receive support within a satisfactory timeframe,” he added.

PensionHelp has been approached for comment.

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 - two years since the introduction of pension freedoms - showed as much as £50bn has been pulled from final salary pension schemes in the past two years.

Mr Kershaw argued that the Simplybiz's other two DB transfer partners - Grove Pensions and Creative Wealth – “have plenty of capacity to take on additional cases”.

SimplyBiz is aiming to create a DB transfer panel of firms, due to the increased demand.

Mr Kershaw said: “I am in discussions to add a fourth firm to the panel, the due diligence process is nearing completion and I am hopeful of making a further announcement within the coming weeks.”

But some have criticised the move as an attempt to generate higher fees.

David Penney, director and chartered financial planner, at Penney, Rudd & Winter, said “if the adviser is charging a fixed non-contingent fee for the report, the size of the cash equivalent transfer value (CETV) should be irrelevant”.

He said: “It would appear that this decision is based on the belief that the larger CETVs will generate a greater fee once transferred, indicating there is a presumption a transfer will take place.”

Mr Penney argued that if the issue is capacity and the firm is “linking it to the probability of a transfer being recommended, then why not say that they will only take on cases for a minimum fixed fee of £x after the client has been through a triage process?”

He added: “To be fair, that is a commercial decision and down to them. But it isn’t great in the current climate.”

maria.espadinha@ft.com