A full definition of a pension transfer can be found in the handbook glossary.
Where an individual is switching from one personal pension to another, for example, from a personal pension to a SIPP or from one occupational trust-based scheme to another, this is not a pension transfer.
Firms are not providing sufficient evidence for recommending a transfer, or the reasons given were not specific to the client. We have seen examples where clients with different attitudes to risks are being advised to invest in the same fund with little or no justification. Firms need to ensure their risk profiling procedures are in-line with the good practice we published.
Our rules (COBS) require firms advising on pension transfers to have a specific permission – advising on pension transfers and opt-outs. Firms who wish to carry out pension transfer business must apply for this permission. If a firm does not have these permissions, they cannot undertake this activity.
In addition to the firm having the required permission, the advice must be given, or checked by, a pension transfer specialist. A pension transfer specialist must follow our training and competence rules, and have the appropriate qualifications and with that, the permission to perform the function. The table of appropriate qualifications is available in our Handbook.
If you have acted out of scope of your permission, you need to have the business reviewed by a suitably qualified person to ensure the advice given was suitable. You should also review your system and controls, to make sure this does not happen in the future.
Find out more about our training and competence regime.
Our rules require a transfer value analysis (TVA) to compare the benefits being given up from a defined benefit pension scheme with those that could be offered by a personal pension scheme.
We were advised of potential misuse of the existing assumptions used in a TVA, particularly when valuing pension increases in retirement.
We published rules and guidance in PS12/8, to strengthen the protection for members of defined benefit pension schemes who are considering moving their money into personal pensions.
A number of changes were made to our rules to ensure a fairer analysis of a pension transfer, including:
Firms need to think more actively about how the comparison and the recommendations are presented to clients and their ability to understand the long documents that they receive
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