Transferring Defined Benefit Pensions

Defined benefit pension transfers have landed many financial advisers in hot water with the financial regulator (FCA).

Indeed the FCA seems to be raising concerns daily regarding the transfer of defined benefit pension schemes. Although this planning is in place to allow people to benefit from “Pension freedoms” many advisers still seem to forget that the default position is NOT to transfer defined benefit pension schemes.

Below are just two recent headline-grabbing pieces:

FCA stops five more firms doing pension transfer

FCA finds serious failings in the pension advice market

So is transferring your pension rights, especially final salary benefits, a truly bad thing?

The answer is, as so much else in life, it depends…

The reason to involve experienced paraplanners, including us outsourced paraplanners, in the defined benefit transfer process, is, in essence, quite a simple one; to evidence suitable financial advice.

Financial Advisers are experts in getting to know the financial planning needs of individuals and coming up with robust financial plans, they are, on the whole, not so good at evidencing this advice on a file!

Effective Pension Transfer Suitability Letters:

Having been involved in the research and analysis of literally dozens of potential pension transfers on the behalf of financial advisers since pensions freedoms has been live. We have seen many cases were transferring made complete financial sense and others were transferring would be akin to financial suicide.

That is why we launched the Paraplanning Hub, an outsourced financial paraplanning and technical research company. We provide financial planners with an unbiased opinion on whether a defined benefit transfer makes sense or not. Paraplanning Hub is not a regulated advice company so we cannot instigate transfers (although this also means we have no financial interest in whether a transfer proceeds or not). What we can do though, is undertake a thorough analysis of an individual’s pension schemes and let you know if we really think it could be in their best interests or not (based on years of experience and feedback from compliance experts). Please note – we will not construct a positive transfer recommendation letter unless we believe it is in the clients best interests.

Transferring Defined Benefit Pensions

Our managing director is a chartered financial planner with nearly 30 years experience of active financial planning and technical research. He has advised on dozens of defined benefit pension transfers for numerous individuals (when active as an adviser) and as a paraplanner of financial advisers.