Pensions - Articles - DB pensions advice market must not go into lockdown

As part of a new guide for firms on supporting customers during the coronavirus crisis, the FCA has set out some new guidance on ‘expectations of advisers giving defined benefit transfer advice’ during the coronavirus crisis.

 Steven Cameron, Pensions Director at Aegon said: “As the FCA rightly highlights, the coronavirus crisis could prompt more people to take advice on transferring from a defined benefit to a defined contribution scheme. For some, this might be the right thing to do, and advisers need to be able to meet that need particularly where delaying could be to the significant detriment of the customer.

 “The FCA has set out some potential misconceptions for advisers to face up to when advising clients. As it says, an increase in a transfer value doesn’t necessarily make transferring ‘better’. Similarly, death benefits are not always higher in the defined contribution world. Some clients may be particularly drawn to transferring if they believe their employer is ‘going under’ and here, the FCA reminds advisers to provide a fair assessment of the Pension Protection Fund.

 “This guidance comes at a time when trustees may be considering deferring quoting or paying transfer values for 3 months. While some trustees may need to take time to review transfer calculation bases, the FCA is clearly and helpfully not envisaging a blanket ban. For individuals planning to transfer to draw a flexible income in the short term, or in ill health with genuine concerns over death benefits, it’s important that this market doesn’t go into lockdown and is allowed to continue to function.”

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