Defined Benefit  

Novia overhauls pension transfer service

Novia overhauls pension transfer service

Novia Financial has overhauled the pension transfer value analysis service (Tvas) it launched last year.

At the start of 2017 the wealth management and platform provider reacted to the surge in defined benefit (DB) transfer requests by unveiling a transfer value analysis system (TVAS) service that provides advisers with the facility to compare the benefits of a defined benefit scheme with the Novia Sipp.

It was built by the in-house Novia team and externally reviewed and validated by financial services technology firm Dunstan Thomas.

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However in March this year, the Financial Conduct Authority (FCA) published a policy statement and consultation paper on new rules on pension transfer advice. 

The paper stated existing transfer value analysis (TVA), which focussed on the ‘critical yield’ needing to match a guaranteed income, would be replaced.

Instead the transfer value comparator (TVC) will show, in graphical form, the cash equivalent transfer value (CETV) offered by the DB scheme plus the estimated value needed to replace the client’s defined benefit income in a defined contribution pension, assuming investment returns consistent with a client’s attitude to investment risk and that they purchase an annuity.

A CETV is generally based on the full value of the expected pension income, but with no allowance for individual circumstances, such as marital status or a desire to take tax-free cash.

This means a consistent comparison can only be provided if the estimated value also ignores individual circumstances.

The FCA does not require the TVC should be personalised and instead the watchdog expects firms to take account of personal circumstances when preparing the Apta.

Now Paul Boston, sales director at Novia, said the firm’s pension transfer analysis report has been updated to full comply with recent appropriate pension transfer analysis (Apta) requirements as outlined by the FCA.

The Tvas report has been updated with the mandatory transfer value comparator (TCV) and is being held at a value of £75 plus VAT.

Paul Boston, sales director at Novia, said: "We have had enormously positive feedback from our supporting adviser clients on our innovate Tvas tool and we believe the enhancements made will further extend the value of this service.

"Advisers who have already received a Tvas report from us ahead of the deadline can send a request and we will reissue your report in the new Apta format free of charge."

Andy McCabe, managing director at Selectapension, said: "It’s good to see that many advisers have already familiarised themselves with the TVC. 

"Our APTA with TVC tool equips advisers with all the necessary features, including TVC, income modelling and lifetime allowance, to enable them to run a comprehensive analysis and demonstrate the most suitable strategy for their clients."

FTAdviser recently reported (20 September) that pension transfer advisers were “oblivious” to the new rules that are being imposed by the regulator around pension transfer advice.