Transfer value analysis requests will continue to soar, with the demand for transfers still high, according to the chairman of CTC Software.
Actuary Nigel Chambers, chairman of CTC, which has provided defined benefit transfer calculations over the past 25 years, said the demand from advisers for transfer values was "at record highs", with figures from The Pensions Regulator suggesting an average of more than 100,000 DB transfers a year.
He said: "CTC has always provided DB transfer calculations throughout the past 25 years and has not received any complaints. CTC has enjoyed a record year for its DB transfer bureau services."
A recent sample of CTC transfer value requests, sourced exclusively by FTAdviser, showed there were more than 3,800 cases over the past 18 months.
| Transfer Cases |
Total TVs | £2.2bn |
Average TV | £575,000 |
Total Number of Cases | 3893 |
According to Mr Chambers, the average CTC transfer value is higher than the industry average, because of high demand for the service, which has pushed values up. The CTC transfer service is open to all advisers and providers.
Further data from CTC processed transfers showed the age of the client was perhaps not as expected as many were far from retirement, he added.
Mr Chambers said: "We believe that young people are interested in transferring pension benefits due to transfer values being at a ‘once-in-a-generation’ high, pension fund deficits and DB pensions falling into the Pension Protection Fund (PPF)."
For example, there were 633 transfer value calculation requests from people in the 30 to 50 year age bracket, according to CTC data.
Age Bands | Total Cases |
60+ | 691 |
55-60 | 1527 |
50-55 | 1023 |
30-50 | 633 |
<30 | 8 |
Mr Chambers added: "To transfer from a DB scheme is a complex financial planning decision, which, like all areas of financial planning, is based on complex calculations.
"The new compliance requirements for transfers which have applied from this month are more complicated, particularly the need to calculate the Transfer Value Comparator for the receiving fund.
"CTC's actuarial and technology experience in DB transfers provides us with confidence to remain open to provide compliant transfer calculations to regulated providers and advisers."
The comments come after the Financial Conduct Authority (FCA) unveiled its new pension transfer rules, which came into effect on October 1.
Under these rules, financial advisers have to provide their clients with a value of how much the benefits in their defined benefit scheme would cost today in the open market, which is the transfer value comparator.
The FCA also said it would proceed with its proposal to require that all advice on the transfer and conversion of safeguarded benefits should include a personal recommendation.
Advisers will have to undertake an "appropriate pension transfer analysis" (Apta), personalised to each customer's needs and objectives.
At the time, the FCA said: "In our view, an effective Apta should help to demonstrate the suitability of the personal recommendation."
simoney.kyriakou@ft.com
