DEFINED BENEFIT / FINAL SALARY PENSION SCHEMES

We possess the specialist qualifications required to advise in this area, and have seen an upturn in enquiries about transferring out of such schemes over the past year or so. This has been prompted by several factors:

•  Rising Cash Equivalent Transfer Values (CETVs) due to low gilt yields.
•  The ‘Pensions Freedom’ regulation enabling benefits to be taken more flexibly from individual plans, and often at earlier ages.
•  The improved tax treatment of death benefits under individual plans.

The improved tax treatment of death benefits under individual plans.

This is a highly regulated area, as despite the high examination threshold for IFAs advising on DB transfers, the Financial Conduct Authority is rightly concerned about the severe impact of wrong decision-making on client’s lives. For this reason, we do not act on an ‘insistent client’ basis by signing declarations for scheme administrators should we feel that a transfer would not be in someone’s best interest.

While we welcome enquiries in this area, as it forms part of the holistic service we offer, we operate a specific fee structure for the advice process. This is a reflection of our specialist qualifications, and the necessary due diligence considerations of detailed analysis of being active in this field of advice.

•  Stage One: Initial meeting where the potential client brings a current CETV and preserved benefit statement. By the end of this meeting, we will be able to indicate whether we feel that transferring benefits may be provisionally suitable, or whether remaining as a member of the scheme is clearly the right course of action.
•  Stage Two: Detailed report including the mandatory requirement of a TVAS (Transfer Value Analysis Service) calculation of the critical yield. The report also considers all other relevant factors that should be taken into account in considering transferring. It also provides investment recommendations for the transfer payment within an individual vehicle.

As part of the above to Advice, we also sign the Regulated Advice Declarations required for proposed transfers of over £30,000. We prefer to work on an ongoing basis with clients transferring out of defined benefit schemes, in order to ensure continuing positive outcomes from what should be seen as one of the biggest financial decisions taken in life.