A senior FCA person has outlined the regulators expectations with regard to transfers out of defined benefit schemes into money purchase arrangements. There is nothing new. The usual good practice and common sense stuff about weighing up all the pros and cons, making sure the customer understands everything and so forth. In other words, what any half decent adviser has been doing since day one. However, still missing, is any comment on the parlous state of many final salary schemes today. The phrase ‘giving up guaranteed benefits’ is still trotted out without comment or qualification.

Pensions Deficit

In 2007, the FTSE 100 companies had an overall surplus on their pension funds of £12 billion. In 2017, ten years later, this had morphed into a £17 billion deficit. In the country as a whole there are around 6000 private final salary schemes with 11 million members. Around 60% of these schemes are identified as ‘vulnerable’. To put it another way, the majority of final salary schemes in the country are in trouble. What is the use of formulating advice on the basis of guaranteed benefits when those benefits may be far from guaranteed? Hardly ‘treating the customer fairly’. Our advice is that all DB to DC transfers should include a section on the viability of the potentially ceding scheme. The latest trustees report would be a good starting point. Be aware that the fact of the regulator being off the pace in an area, is no protection against future complaints.



The above is the lead article in our latest monthly News Notes – November 2017. Other topics in this edition include:

  • Price Comparison Sites
  • Just Deserts
  • Scams
  • Not Before Time
  • MiFID II Implementation
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Haven Risk Management : FCA Compliance Consultants