Our latest report of this year’s ACA Pension Trends Survey has pointed to a huge bow wave of pension transfer requests from DB schemes, which is placing enormous pressures on scheme administration.

Alongside other freedom and choice costs, transfer value activity is adding between 10-20 per cent to scheme administration costs over previous years. We found some six out of ten employers reporting that members are having difficulties in finding advisers prepared to advise on these transfers which may, in part, be contributing to only one in four requests being completed.

There are concerns about both the availability and appropriateness of the regulated advice available to DB scheme members. Other research suggests that only around half of those who took advice to transfer were properly advised. Of the other half, one-third of recommendations were unsuitable and the remainder unclear.

This is disappointing but isn’t surprising. DB pensions are complex and varied and their value is not well understood. Comparing a DB pension to uncertain post-transfer investment returns and income choices is fiendishly complex.

Many schemes are additionally noting to our members that where IFAs are providing advice, the questions they pose during the transfer process are varied and time consuming. The quantum of enquiries and differences in approaches is posing difficulties for administrators and pushing up costs. Standardisation in the questions asked would seem to be a sensible step and this may be an area where the FCA could act swiftly to help all concerned.

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