Are you considering transferring your pension?

Sunday, 14th December 2008 18:23 - by Resident IFA

The Financial Services Authority (FSA) has published guidance for Independent Financial Advisers (IFAs) as to what could be perceived as an inappropriate pension transfer from one provider to another. The majority of such pension transfers will be from Personal Pension schemes rather than Occupational ones. Advisers are urged to consider past transfers they have arranged, look at management information in this area, take remedial action where necessary, and consider whether they should amend their approach to pension transfer advice in the future. To some degree, this is obvious, but I think of more interest to the general public are the four headline ‘Unsuitable outcomes’. These are the key questions to consider to ensure the pension transfer does not disadvantage the Client. If you are considering a pension transfer, these are equally good questions to look at from your own perspective as the Client, in relation to your situation and the advice given to you: o The customer is switched to a pension incurring extra product costs without good reason. o The customer is switched to a new pension and loses benefits from their ceding pension (for example, guaranteed annuity rates) without these being justified. o The customer is switched to a pension that does not match the customer’s attitude to (investment) risk and personal circumstances. o The customer is switched to a pension where there is the need for ongoing advice but this has not been explained, not been offered or where offered, has not been provided. The above ‘Unsuitable outcomes’ can be broken down further into considering consolidation, Stakeholder pensions, investment allocation re-balancing at regular intervals, etc., but the message is clear – try to understand the advice as well as you possibly can and ask as many inquisitive questions as it takes to satisfy yourself that a pension transfer is for the best. Until next time…