Decline in the number of Defined Benefit Pension Transferring Out
16th May 2019
There has been a noticeable slowing down of the number of
Defined Benefit (DB) Transfer Schemes that are taking place. There are a number of factors that is behind
Jeff Lewis, director at independent financial advisors
RobMac in Edinburgh says “Transfer Values continue to remain quite high and
unless Interest rates and Gilt yields rise, they are like to remain the same.
So, while transfers are still an attractive proposition there are still a
number of reasons why there are less schemes being transferred.”
“One of the reasons is that the Financial Conduct Authority
(FCA) have introduced a new procedure that provides a comparison between an
existing Defined Benefit Pension Scheme and transferring to a new Defined
Contribution Scheme. They’ve done this to help illustrate in monetary terms
what they are actually giving up by transferring .”
“We’ve found that when clients come to talk to us about
transferring out of the existing scheme because of the attractive transfer
values, that further discussion often brings a better understanding of their
current position. In that way we can reach a decision that is best for them and
since the initial rush of transfers when the legislation was introduced, we’re
seeing less clients taking up the option to transfer due to the not
insignificant benefit in having an
index-linked income in retirement.”
“There is another industry related reason for the decline in
transfers which is to do with the number of IFAs prepared to offer advice on
the suitability of transferring out of an existing DB. Insurers who provide
Professional Indemnity (PI) cover to IFAs have significantly increased their
premiums. I think it is a case of the insurers being nervous about potential
cases of “mis-selling” further down the line. The bottom line is that IFAs are
having to pay more for their PI cover and therefore many are limiting their
liability by either not advising on transfers or restricting the numbers that
“So, in summary, there are a number of non-related factors that are impacting on the volume of transfers taking place and we don’t see a change to that pattern emerging any time soon.”
Robson Macintosh & Company Ltd.
15 Manor Place, Edinburgh, Scotland, EH3 7DH
Tel: 0131 226 6700 Email: firstname.lastname@example.org
Registered in Scotland No. - SC232903.
Registered office: 15 Manor Place, Edinburgh, EH3 7DH
We are using cookies to give you the best experience on our website.
You can find out more about which cookies we are using or switch them off in settings.
Strictly Necessary Cookies
Strictly Necessary Cookie should be enabled at all times so that we can save your preferences for cookie settings.
If you disable this cookie, we will not be able to save your preferences. This means that every time you visit this website you will need to enable or disable cookies again.