Defined Benefit  

Adviser pension transfer tool launched

Adviser pension transfer tool launched

Software provider O&M Systems has launched a transfer value comparator tool to support advisers in the defined benefit transfer market. 

The tool will provide advisers with three reports, including a client-facing document containing the information required by the regulator, and an adviser report of the technical data needed to support a transfer recommendation. 

The third report, also client facing, is a comparison of options available, such as remaining in the DB scheme, transferring out, and the purchase of an impaired life annuity. 

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O&M Systems stated the first two reports are available in its entry-level package and existing O&M Profiler ESP users can access this without any additional charge. The retirement modelling report is available via the firm's ‘Professional’ system.

The transfer value comparator is part of a set of rules introduced by the Financial Conduct Authority in October in response to the evolving British Steel pension transfer debacle and increased transfer requests following the pension freedom reforms.

This comparator shows, in graphical form, the transfer value offered by the DB scheme and the estimated value needed to replace the client's DB income in a defined contribution environment. 

Under the new rules, advisers will also have to undertake an "appropriate pension transfer analysis" (Apta) personalised to each customer's needs and objectives.

Graham Miller, managing director at O&M Systems, said: "The requirements for TVC and APTA were introduced in October 2018 and it was clear to us that adding a TVC to an already lengthy transfer value analysis report doesn’t create an APTA. It simply leaves you with a hugely complex report that isn’t client friendly. 

"At no point has the FCA stated that cash flow modelling is a mandatory requirement, although its hard to see how a compliant APTA case can be built without it."

Steve Webb, director of policy at Royal London, said: "When the FCA asked advisers to present the pros and cons of pension transfers in the form of a bar chart rather than a critical yield, there was a danger that this would be yet more information that could leave clients baffled.  

"Anything that meets regulatory requirements whilst presenting information in a more straightforward way must be welcomed."