This is our finalised guidance for firms on how to calculate redress for unsuitable defined benefit pension transfers. The summary of feedback outlines the response to our consultation.
Show summary of feedback received (PDF)
Show FG17/9 - updated March 2022 (PDF)
1 September 2021 update: We announced the start of a periodic review of the guidance and set out what we expect of firms while the review is ongoing, including clarifying how firms should be applying or interpreting the guidance in certain areas.
31 March 2022 update: We updated FG17/9 with new CPI inflation assumptions for use in redress calculations from 1 April 2022. We also added a reminder of firms’ overarching DISP obligations, including where the guidance does not address the particular and individual circumstances of a customer’s complaint.
In GC17/1, we consulted on guidance to update the methodology used to calculate redress for unsuitable pension transfers from a defined benefit pension scheme to a personal pension. Our proposals resulted from a review of the existing methodology carried out by PricewaterhouseCoopers LLP (PwC).
We updated the finalised guidance on 26 March 2021 to reflect changes to the Consumer Price Index (CPI) inflation measure due to the Government’s decision to change the way that the Retail Price Index (RPI) inflation measure will be calculated from 2030. The updated guidance resulted from a review of the existing methodology carried out by PricewaterhouseCoopers LLP (PwC). As explained in the statement we published on 3 March 2021, the updated guidance applied to all redress calculations from 1 January 2021.
We updated the finalised guidance again on 31 March 2022 with CPI inflation assumptions for use in redress calculations from 1 April 2022 (Annex 2). We also used this update to remind firms of their overarching DISP obligations (paragraph 3). Where the guidance does not address the particular and individual circumstances of a customer’s complaint, firms should have regard to DISP and assess complaints and redress offers fairly, consistently and impartially. This could include, for example, situations where the original DB scheme no longer exists and/or the scheme benefits have been bought-out, and the customer would have been entitled to these alternative benefits if they had received suitable advice. It could also include how a firm should establish the customer’s retirement date where it is unclear if the age at which the customer has started to access their transferred pension benefits is the same age at which they would have accessed their DB scheme benefits.
Who this applies to
This guidance may directly impact on:
- consumers who were given unsuitable advice to transfer out of a defined benefit pension scheme to a personal pension
- firms that provide advice on transfers from defined benefit pension schemes to personal pensions
- software providers for these calculations
- professional indemnity insurers
The guidance contains assumptions which respondents should use to calculate appropriate redress. Assumptions should be updated quarterly in line with the guidance.