Selectapension’s defined benefit (DB) transfer value analysis service (TVAS) has been used in more than 90,000 cases, surpassing the firm’s money purchase tool for the first time.
Several providers have recently stopped offering free TVAS tools, after the regulator said it was now of the view it was "unlikely" providing or accepting free software for transfer value analyses would fall on the right side of its inducement rules.
LV, Scottish Widows, Prudential, Old Mutual Wealth and Standard Life have stopped offering this service, while Novia has started charging for its TVAS tool.
But as tool providers pull out, demand for transfer values remains at record levels.
Between April 2017 and March 2018, Selectapension, the investment and planning software firm registered 93,855 defined benefit TVAS cases, while processing 86,347 on money purchase.
While the money purchase tool has had consistent usage levels (on average just under 90,000 cases per year), the DB TVAS grew significantly, with Selectapension registering around 25,000 cases between April 2015 and March 2016, the first year of pension freedoms.
Since April 2015 the number of people transferring out of their DB pension transfers has been soaring, as savers seek to take advantage of sky-high transfer values and to move their nest eggs into defined contribution (DC) schemes in order to access them using pension freedoms.
According to figures from the Office of National Statistics (ONS), funds transferred out of pension schemes almost tripled to a record £34.2bn in 2017.
According to Peter Bradshaw, director at Selectapension, the recent policy statement issued by the Financial Conduct Authority (FCA), which makes the usage of a transfer value comparator mandatory in conducting an appropriate pension transfer analysis, “is likely to further boost usage” of the firm’s DB TVAS tool.
He said: “Beyond this, PS18/6 added little to what had been issued in consultancy paper CP17/16, and the FCA has deferred addressing the more problematic areas like qualifications, advisers referring cases to specialists and contingent charging.
“This has effectively preserved the existing processes pending the end of further consultation which runs until the end of May.”
In February, Selectapension launched an income modeller in its defined benefit and drawdown tools, which helps financial advisers to show their clients if there is a simpler way to achieve their savings goals without transferring out their DB pensions.
The software company will continue to focus its business in the report writing area, after exiting the DB transfer advice market in November.
maria.espadinha@ft.com
