Should you take more risk with your pension funds?
There are no easy answers to those questions. Moreover, the answers can be very risky. You may ,therefore, consider the following:
The FCA is concerned that firms are recommending that large numbers of consumers transfer out of their defined benefit pension schemes despite the FCA’s stance that transfers are likely to be unsuitable for most clients.
Megan Butler, Executive Director of Supervision, Wholesale and Specialists at the FCA said:
‘We have said repeatedly that, when advising on DB transfers, advisers should start from the position that a transfer is not suitable. It is deeply concerning and disappointing to see that transfers are still being recommended at the levels we have seen.
The FCA surveyed 3,015 firms and found that between April 2015 and September 2018:
- 2,426 firms had provided advice on transferring their DB pension.
- 234,951 scheme members had received advice on transferring.
- Of those 162,047 members had been recommended to transfer out and 72,904 had been recommended not to transfer.
- The total value of DB pensions where transfer advice had been provided was £82.8bn with an average value of £352,303.
- 1,454 firms had recommended 75% of more of their clients to transfer. One reason a firm may be recommending a large number of clients to transfer is if the firm has a robust initial guidance service triaging clients. 1,346 firms reported data on the total number of clients who had not proceed past the firm’s initial guidance. The total number of clients reported as not proceeding to advice was 59,086. When these triaged clients are factored in 55% of clients were recommended to transfer.
Any customer who has concerns about the advice they received when transferring out of DB scheme should first off contact the firm which gave them the advice.
You should take action if you are among those people who transfer their defined benefit pension based on an advice received from an adviser.