One in 10 defined benefit (DB) pension schemes in the UK are appointing independent financial advisers to assist their members with transfers, research from Aon found.
The consultant’s research, which covered 300 final salary plans, also showed in the majority of these cases it is the sponsor or the trustee who pays the bill for the advice.
Ben Roe, senior partner and head of the member options team at Aon, said three years after pension freedoms were introduced, both schemes and members now having some points of reference from other schemes on the way that DB to [defined contribution] DC transfers can be undertaken.
He said: “Most telling in this respect is the level of support that schemes are now offering to members.
“Given the industry’s concerns around the quality and cost of financial advice, trustees and sponsors are increasingly putting in place preferred IFAs, financed by the members or in 80 per cent of cases by the sponsor or trustees.”
The research also showed a further 10 per cent of schemes are considering making online modelling tools and/or paid for IFA advice available within the next 12 to 18 months.
Mr Roe said: “There is still some debate about the level of support that a scheme can or should offer, but it is clear that reducing the barriers for members to engage with advice or streamlining the process, does help ensure that members make the most appropriate decision at retirement.
“We fully expect that this trend will continue.”
FTAdviser reported last month that the scandal involving DB transfers from the British Steel Pension Scheme (BSPS) has prompted pension trustees to appoint IFAs to help their members.
Overall, 90 per cent of the schemes polled have seen an increase in transfer value requests from members during the last 18 months, with around 40 per cent seeing a significant increase.
Aon’s survey also showed that 30 per cent of the final salary plans have taken action to increase the level of automation of transfer value calculations in the last 18 months.
According to Nathan Long, senior pensions analyst at Hargreaves Lansdown, there hasn’t been “evidence of trustees picking a panel of advisers for scheme members to choose from”.
He said: “In fact, if anything we have seen trustees often unwilling to effectively rubber stamp a particular advisory firm.
“It really doesn’t matter who pays for the advice, whether it be the employee or the employer or trustee. If the advice is of a high quality it will provide the correct outcome for the member.
“Given that final salary pension transfers are rarely advisable, I would be surprised to see trustees and sponsors willing to bank roll advice which ultimately leaves someone in the same position.”
maria.espadinha@ft.com
