Following the introduction of UK pension reforms in April 2015, if you wish to investigate whether to transfer out of your private sector defined or safeguarded benefit UK pension (and your value is greater than £30,000) you need to receive advice from a UK regulated financial adviser. This is not as simple as it may seem.

As we have mentioned throughout our website, to be permitted to use the phrase “Pension Transfer Specialist” in the UK means your adviser has a higher level of professional qualification. They must have the Chartered Insurance Institute (CII) Level 4 Diploma in Financial Planning and either G60, AF3 or AF7 qualifications.

These qualifications are known within the UK as the toughest in the profession, and rightly so. In addition to having these qualifications the adviser must have the appropriate Professional Indemnity (PI) Insurance to conduct Defined Benefit advice. Unless you’ve been living in the Boon Docks or Woop Woop for the last five years, you will be aware that many UK firms have had their permissions to advise on defined benefits revoked and this has led to PI insurers either withdrawing from the market entirely or increasing their premiums dramatically.

As it is a regulatory requirement to receive advice from a UK advice team with the relevant pension transfer permissions there is nothing you can do if you wish to transfer out of your defined benefit scheme, the trustees will simply not release the funds without evidence this advice has been taken.

We applaud this stance from the Financial Conduct Authority. It is designed to protect you, the consumer. Defined benefit schemes or safeguarded benefit schemes provide you with guarantees that once sacrificed can never be recovered. This is fully understood and recognised within the UK IFA community. Since being in Australia though, we have heard nightmare phrases being used by so-called QROPS specialists as “The reports are not worth the paper they are written on”, “It’s a tick box process”, “We use our own superior excel spreadsheet”….and more. Please do not accept this attitude as satisfactory.

Be under no illusion, a defined benefit entitlement is a promised income stream in retirement for you and your spouse for the rest of your lives and to lose this benefit by transferring out means your fund is exposed to market risk, longevity risk and morbidity risk. Do not take this decision lightly.

We have engaged with a UK FCA regulated Pension Transfer Specialist firm, with all the relevant permissions and PI Insurance coverage, on your behalf. They provide a non-contingent advice report based on us informing them of all the costs and fees associated with an alternative structure. You are more than welcome to use your own UK Pension Transfer Specialist, we will be happy to use their advice once we’ve completed our Due Diligence on them.

The advice team engaged will make a recommendation statement whether it is in your best interests to transfer out or not. If the advice is to not transfer then we will not proceed.  You are still entitled to transfer out, the FCA requirement is only that you received advice, not whether you acted on it, but we will no longer act for you.

The UK FCA regulated advice is a vital part of our service offering, but not the entire process. There are many issues around transferring than simply being advised to. We do not engage this advice in isolation due to the inherent dangers. We provide a full advice and implementation service to ensure you are protected by legislation, regulation and the tax man. Please contact us for details of the fees involved in delivering this high quality advice.