The Financial Conduct Authority (FCA) and The Pensions Regulator (TPR) have alerted the trustees of company pension plans of some of the UK's biggest businesses that unscrupulous advisors may try to persuade their members to transfer out their benefits.
Their action has come after there has been a surge in pension transfers following the announcement of pension freedoms in 2015. The quarterly total has hit £10.6 billion in the first quarter of 2018 with the majority going from defined benefit (DB) schemes to defined contribution (DC) schemes. Both the FCA and TPR fear that rogue advisers are preying on the worries of people about the future of pension funds. Back in April, both bodies warned the trustees at Sainsburys and Asda after the two supermarket giants announced a merger back in April. The regulators believe that giving up and assured DB retirement income by transferring to a potentially riskier personal pension arrangement is "unlikely"to be in the best interests of most people.
"Our primary concern is that DB scheme members requesting a cash equivalent transfer value [from their pension scheme] have all the information they need to make an informed decision about what is in their best interests. This includes understanding the fees that are harged under any new pension arrangement as these can make a significant difference to the value of the fund," said a spokesperson for the Pensions Regulator.
Last year, hundreds of Port Talbot steelworkers were advised to transfer their guaranteed pension benefits into riskier, high charging and unsuitable pension funds.
"We didn't move fast enough to give guidance and information to the [British Steel Pension Scheme] trustees for them to pass on to their members about the whole area of transfers, reinforcing what remains our view that it is generally not in the members' interest to transfer out of a DB scheme," said Mark Boyle, non executive chairman of the board of the Pensions Regulator. "We have learnt from that. We are not waiting for the review [of the Port Talbot scandal]. We've already written to sponsors and schemes in eight separate situations where there could be similar issues in terms of transfer activity [to Port Talbot]." Our administration is managed in-house by our own pension experts and 100% secure allowing us to be more versatile bringing you and your employees the best possible pensions experience.