The Financial Conduct Authority (FCA) has provided an update into its investigations into the transfers of defined benefit pension schemes. Comment from Nathan Long – Senior Pension Analyst at Hargreaves Lansdown.
The FCA review found that only 47 percent of transfers were deemed to be suitable, whilst 17 percnt were deemed unsuitable and, for the remaining 36 percent, it was unclear. Around 80,000 transfers it is estimated were said to have taken place in the last year and with advice required for all transfers, where the transfer value exceeds £30,000.
Nathan Long – Senior Pension Analyst at Hargreaves Lansdown: ‘The starting point for anyone with a defined benefit pension should be to assume it is best left as it is. Transferring means giving up a promised income in return for the uncertainties of investing in the stock market.’
‘Transferring away could be investigated further if you are in poor health, are single or have concerns about the employer that provides your pension. These types of pension transfer are very complicated and require very specialist advice. If you want to investigate a transfer further seek out an experienced adviser.’
Tom McPhail, Head of Policy at Hargreaves Lansdown: ‘Taken in conjunction with evidence of a rapid decline in demand for annuities, we are concerned about pension investors’ increasing dependence on non-guaranteed pensions for their retirement security. This has important implications for policy makers in government and in the FCA’.