DB to DC pension transfers

DB Transfer considerations

The starting point for occupational pension transfer advice has always been to assume that a transfer will not be in the member’s best interests. The high risk nature of advice in this area means it is essential to have robust processes in place. This is not to say that pension transfers are always wrong. There are considerations that go beyond the Appropriate Pension Transfer Analysis (APTA) and accompanying Transfer Value Comparator (TV) that are now more relevant than ever.

Appropriate FCA permissions

Before making recommendations on pension transfers it is important to check that your firm has the appropriate regulatory permission for this type of business.

Pension transfers include transfers from money purchase schemes, including EPPs, final salary schemes and the transfer of other safeguarded benefits. The definition now includes transfers for the immediate vesting of benefits (which historically were not treated as pension transfers). It also includes transfers from money purchase occupational schemes without safeguarded benefits.

The firm should hold the permission 'advising on pension transfers and pension opt outs'

In addition to the permission the advice must be given, or checked by, a pension transfer specialist.

Submitting business to Standard Life

If after advising your client you decide that a transfer is in their best interest and they wish to proceed the key document that should be required by the trustees to guarantee the transfer value is the member discharge form.

Where the transfer deadline is tight we encourage advisers to ask the trustees if they will accept the discharge form and any other paperwork that only needs signed by the member. This may ensure the deadline is not missed and the guaranteed transfer value should be secured.

Rules will vary on a scheme by scheme basis. Some trustees will accept the discharge form as the trigger to secure the guarantee transfer. Advisers should check on the position with the scheme trustees on a case by case basis.

Any documentation that needs to be signed by Standard Life as the receiving scheme should be submitted using this form.

Remember a pension transfer will not be right for everyone. All of the facts need to be considered and the customer will need to decide if it's right for them. They could lose money by giving up valuable benefits, and there's no guarantee of a better pension as a result of transferring.

A defined contribution pension is an investment and, as with all investments, its value can go down as well as up, and could be worth less than originally invested.