Defined Benefit  

Advisers welcome DB transfer template

Advisers welcome DB transfer template

Financial advisers are pleased with the defined benefit transfer template launched this week, which they hope will help remove barriers commonly encountered in the advice process.

The Pensions Administration Standards Association launched guidance on Monday (July 8) which dictates that pension schemes and administrators should take no longer than 10 weeks to process standard defined benefit transfers.

The 40-page document also includes templates for letters to be sent by the schemes to the members when acknowledging a transfer request, and the DB transfer template which all parties involved in the process are urged to start using.

Mike Lacey, partner at financial adviser Bowman Pension Consulting, said the guidance should become the gold standard in this field.

He said: "Even though it’s not compulsory, having clear guidance like this really should become the gold standard when considering the transfer of safeguarded rights.

"I hear there are trustees refusing to give pertinent information, and adopting this standard will help remove that barrier to advice.

"It will also make life simpler for pension transfer specialists as all the subtle, nuanced differences in the information given are eliminated."

Andrew Boyt, pension transfer specialist and freelance consultant, hoped the template would lead to fewer errors in comparing a transfer versus retaining the existing benefits.

He said: "I have seen cases in the past where schemes have supplied incomplete information and refused to fill in third party questionnaires aimed at eliciting fuller details. It could be quite frustrating."

The DB transfer template is broken down into two separate documents, one with scheme details to be completed by each section of the pension fund - which can be reused for future requests – and a member level detail, which will provide a full breakdown of a member’s benefits for the adviser to obtain a full understanding.

The creation of the document was initially part of The Pensions Regulator's remit after it had responded to industry calls for a standardisation of rules in 2017.

But after working with the Financial Conduct Authority on this matter, and showing early drafts to industry players, the regulator passed on this task to Pasa.

The idea of a template was to reduce the number of information requests from advisers and the time spent on facilitating the DB transfer process.

Brian Hill, managing director & financial planner at Jones Hill, thought the long-awaited guidance could become industry standard.

"I'm looking forward to seeing it in practice," he said.

Nevertheless, Mr Hill noted that financial advisers aren’t included in the list of suitable persons to verify identification documents, which schemes and administrators will ask for to process the pension transfer.

Gem Durham, independent financial adviser at Obsidian, who also noticed this omission, believes it is a mistake, since the document specifies that the person providing professional certification of the document should provide their Financial Conduct Authority number.

The Pasa guidance also establishes good practices for schemes and administrators in relation to each specific part of the transfer process.