Citywire for Financial Professionals
Stay connected:

View the article online at

Pensions transfers blocked by lack of advice

The dwindling numbers of advisers who can sign off pension transfers is stopping retirees accessing their savings.

Pensions transfers blocked by lack of advice

Retirees required to seek financial advice in order to access their pension savings face delays because many advisers aren’t qualified to approve the transfers.

Although the pension 'freedom' reforms in April offered over 55s the chance to get their hands on their pension cash, the reality is that it isn’t that easy for those who have ‘safeguarded benefits’.

Top of the list of ‘safeguarded’ pensions are defined benefit (DB) pensions, also known as final salary schemes, which are considered the Rolls Royce of schemes. In order to take advantage of freedom, DB savers must transfer to a defined contribution (DC) scheme but if a member has built up contributions of more than £30,000 then they will have to get an adviser to confirm it is a good idea to transfer.

The City watchdog, the Financial Conduct Authority (FCA), has already said it expects an annual increase of 9,000 to 15,000 in DB-to-DC transfers.

There is also another scenario where advice must be taken: if a pension scheme offers guaranteed benefits. This typically applies to older schemes where the contract was written with a ‘guaranteed annuity rate’. These rates are the amount of income an individual's pension pot will pay out each year and are far higher than anything available on the annuity market today, with some rates as high as 12%.

If you have a pension of £30,000 or more with a guaranteed benefit then you will have to take advice.

Under both these scenarios, if the pension is worth less than £30,000 you do not have to take advice and are free to transfer and access your cash.

Compulsory advice may seem like a hindrance to those who want to transfer but there is a larger problem with accessing professional advice.

Pension advisers Age Partnership said it had noticed a rise in the number of rejected pension transfers because the advisers who put them through do not have the right 'permissions' from the regulator to do so.

In order to sign off a pension transfer an adviser must hold a ‘pension transfer permission’ with the FCA but many generalist independent financial advisers (IFAs) do not have this qualification.

If a client is given advice by an adviser without the correct permissions, the scheme the retiree is transferring from can stop the transfer, which causes serious delays.

Dan Baines, commercial director at Age Partnership, a pension adviser, said it was a growing problem for retirees hoping to get their hands on their pension cash. ‘One of the things we have noticed is that there are some advisers who are not necessarily aware of the changes,’ he said.

‘We have become aware because there are customers who have tried to crystallise their pension and been told by the ceding scheme that the adviser lacks the permission or qualification to write the kind of business, particularly when it comes to safeguarded benefits,’ said Baines.

The confusion lies in the new rules. Previously, generalist advisers were able to conduct this type of business and many are unaware that they no longer can, hence the delays.

‘The change in the regulation has been missed and [advisers] are not aware…and the customers are finding it hard to access the [new pension] freedoms,’ said Baines.

He added that 25% of the DC cases that come to them have an element of safeguarded benefits.

Steve Lewis, retirement expert at LV=, a pension provider, said he had also seen confusion in the transfer market since freedoms were announced and warned retirees that advice was a ‘scarce resource’ as there were only 2,500 advisers with the relevant permission.

‘Advice has become a scarce resource which is an important factor in an industry that is trying to deal with pension freedom,’ he said.

He said retirees should remember that if they do take advice on transferring, there is no guarantee the adviser will sign it off as in ‘most cases’ people in DB pension scheme should stay put rather than transferring. This is because the benefits of DB schemes are less generous.

‘There could be reasons [to transfer], the person could be in a household where someone else has a significant final salary scheme and the household income is strong,’ he said.

‘It could be that you are single and the scheme provides spousal benefits (which lowers the amount of income paid out) and by taking the transfer and buying an annuity you could be better off…you could have a health impediment (and buying an enhanced annuity would provide you with more money).’

Lewis said pension freedom was not about ‘stripping money out’ of a pension but finding the most appropriate arrangement for the retiree.

21 comments so far. Why not have your say?

Law Man

Sep 07, 2015 at 17:36

Apart from (1) the employee with very low life expectancy, or (2) an employer pension scheme which is seriously insolvent, why would you want to transfer from a % of final salary DB scheme to a DC scheme, particularly as the transfer value will be lowered by the trustees?

The article mentions a single person annuity: I do not imagine changing 2/3 of final salary for a very slightly higher (than one with spouse benefit) annuity would be worth it.

Of course I may be missing something obvious.

report this

Ian Lees

Sep 07, 2015 at 18:07

It is entertaining to see product providers unable to give " advice " and the lack of advisers . . .soon to be discovered by " management " under RDR 2 ( apparently they were unaware of the issues ? ). IN lieu of the Toffs in power who have created these opportunities for SCAMS and imposition of TAX - on the people who did save - is as abhorrent as it is scandalous - and with the perpetrators being the Government ( and their advisers eg chairman of Scottish Widows - a tory grand dee ) . These disreputable insurance companies are commercial - but now malicious - and uncontrolled and dysfunctional. Consumers can have no TRUST in hem like Banks - they cannot be trusted to look after client money. With the reduction in the consumer protection reducing form £ 85,000 to £ 75 ,000 next year - consumers need to be very wary - be AFRAID be VERY AFRAID - your protection is reducing whilst IFA's costs are increasing - and they are laving the industry in their Droves. Any client can demand their money as a basic HUMAN RIGHT - and if they refuse report them to the POLICE - for THEFT.

report this


Sep 07, 2015 at 19:15

This is an awful situation to put people in. Getting good , unbiased advice is extremely difficult. The only person you can really trust is yourself and to know what advice given by an adviser is good and what isn't is almost impossible.

The news that the number of such advisers is dwindling is great news.

report this


Sep 07, 2015 at 19:21

Getting good, unbiased advice is not difficult, if you are prepared to pay for it. That is the nub. Advisers are constipated by the almost inevitable "mis-selling" cases down the line, so are just not advising folk in this.

Dont blame them, blame the regulations that have engulfed them/us.

report this


Sep 07, 2015 at 19:32

It is a mess.

report this

Richard Hudson

Sep 07, 2015 at 19:46

Re last but two para, last sentence, Surely DB schemes are generally more generous than DC schemes.

report this

Keith Cobby

Sep 07, 2015 at 20:06

I have just completed a transfer from DB to DC. I had to be advised and the critical yield came out at 11%. However I have no idea how that figure was generated as I have to generate a yield of 3% to provide the same pension whilst retaining access to capital (a DB scheme is an annuity). As part of my pre-retirement planning I requested a transfer value and this was considerably higher than I had anticipated. I assume the main reason for this is the very low gilt yields as a result of QE. Thanks BoE!

report this

Anonymous 1 needed this 'off the record'

Sep 07, 2015 at 20:30

I have a prospective client sent from Pension Wise who is in poor health, unemployed, divorced and on benefits ( basically down on his luck ), who wishes to have £5000 for his daughters wedding and leave the remainder £23000 for a death benefit for his daughter, because he has a Guaranteed Annuity Rate ( safeguarded benefit and a low fund value ), no IFA wants to go near it , he is now faced with having to take all his fund out or take his annuity from his existing provider ( but he is too young for the GAR). This client has done everything right seeking advice from Pension Wise and searching for an IFA to help him . He is being excluded from advice due to the Safeguarded Rights roadblock.

report this

Gareth Harries

Sep 07, 2015 at 20:49

I think hard facts should speak for themselves i.e. if you want to go this route then check the figures and do not assume anything. Keith's comments are quite pertinent to this.

Find out the transfer value;

Check what Dividend yield you would need to produce the same income;

Understand that your capital will be more volatile, and there could be times when the Dividends could be cut;

Your spouse could also get a higher pension than the typical spouse's pension if the SIPP transfers to them;

The capital now also stays in your family as pensions can be transferred down the family;

So worth considering??

report this

Gerald Watson

Sep 08, 2015 at 07:36

Yes, you have to take advice with safeguarded rights before transfer. But it is only necessary to tell the transferring scheme and prove you have had qualified advice. If that advice is Not to transfer you can still do so. This leaves responsibility with the transferor which is where it should lie as in 95 cases out of 100 it is not the right thing to do. This number would be much higher if it was known when you will die. Pension planning wouldbe much easier if that was the case.

report this

Joe Bloggs

Sep 08, 2015 at 12:54

Gerald Watson, you are quite correct in everything that you say.

The transferring scheme is only interested that you have sought advice from a FCA registered financial advisor. They will require proof of that, a copy of letter should suffice, as long as it contains his/hers registration number. The contents of that advice is irrelevant to them.

Finding a SIPP that will accept a transfer is a bit more difficult, as most will accept IF the adviser recomends you transfer, however if there is no recomendation to transfer then the market is limited, as I have found.

When you speak to some of the providers, there customer advisers says they will accept a transfer, I always recheck by sending an email, then the tune changes. I found this with Interactive Investor.

I have done everything that is required for a transfer, nearly 500K, so i am expecting the tranfer early next week to complete.

I prefer to be in control of my own finances, and have done this, as it gives me greater control for the event of my death, (well my kids will), whereas I can pass on my pension, subject to the usual taxation. If I left it in my DB, then it dies with me. Everyone has different reasons for their actions, that is mine.

report this

Ian Lees

Sep 08, 2015 at 13:09

How interesting ! So when I lose confidence in the Pension Trustees - to act with professionalism and/or integrity ( as happened with Scottish Widows Retirement Benefits Scheme - and who have refused to date to pay out the Full Cash Equivalent ) - the beneficiary has no say in the matter - even when the Trustees are in Breach of Trust - due to fiddling the figures by their employees and their " special relationships " with other Insurance companies in my case Scottish Equitable . Why would anyone go into such a restricted covenant of a Pension Fund ? More importantly the forced contributions of Auto Enrolment - by CON servative Government and David Cameron ( as Lost Leader ) - should be a major concern. This especially after the Gross Negligence of MP 's to look after the State Pension contributions - then requiring the missselling ( and dysfunctional ) insurance companies to be their NEW NHS Trust s for pension contributions - many of whom ( eg Scottish Widows ) are effectively insolvent . . are inefficient EG Friends Life, and others who lack commitment EG Standard Life - the entire insurance industry is in an wholesale mess ! ? ! No wonder Independent Financial Advisers are - withholding their " Great Services " leaving those who have messed it up . . .to take their duty of Care and responsibility - SERIOUSLY and sort out their Eton Mess . . . . . .such is the State of the Nation !

report this

PensionMan via mobile

Sep 08, 2015 at 19:26

In response to LawMan, whilst DB to DC switches are certainly not right for most people, they are clearly much the most efficient option for a lucky few. The scenario would be where the income from a DB pension was surplus to requirements and leaving an inheritance was important to the client. Thanks to pension freedom a DC pension is now an asset which can be passed from generation to generation tax efficiently, whilst retaining control of the pot. Unswitched a defined benefit pension would expire upon the last death and, in the above example, would most likely attract 40%+ income tax before that.

The interesting ethical question would be whether an IFA, insufficiently permissioned by the regulator to recommend such a switch, could in conscience charge a client in the above scenario.

report this

Stuart Trow via mobile

Sep 08, 2015 at 23:10

In response to LawMan, whilst DB to DC switches are certainly not right for most people, they are clearly much the most efficient option for a lucky few. The scenario would be where the income from a DB pension was surplus to requirements and leaving an inheritance was important to the client. Thanks to pension freedom a DC pension is now an asset which can be passed from generation to generation tax efficiently, whilst retaining control of the pot. Unswitched a defined benefit pension would expire upon the last death and, in the above example, would most likely attract 40%+ income tax before that.

The interesting ethical question would be whether an IFA, insufficiently permissioned by the regulator to recommend such a switch, could in conscience charge a client in the above scenario.

report this


Sep 09, 2015 at 08:53

I am afraid Lawman is missing something. While coming out of a DB scheme is not a decision to be taken lightly, there are several good reasons why I decided to come out of a public sector scheme several years ago:

1. Most public sector schemes are not fully protected by the pensions legislation and key aspects can and have been changed quickly by regulation - for example my old scheme is now uprated by CPI rather than RPI. Take a look at what happened in Ireland when they had to be bailed out. On the present calculations the deficits are such that within what I hope will be my lifetime, further reductions seem likely.

2. I had a sufficiently large transfer value not to be living in penury either way.

3. I was unmarried and my partner had her own income and pension scheme.

4. Even under the then rules it gave me much more flexibility as to how and when I took my pension. By judicious use of the increased tax free cash, ISAs and controlling the pension payments, I can avoid paying the 40% tax rate without impacting on my lifestyle.

5. I preferred to take responsibility for my own well being - and can invest according to my particular present and future needs. So far so good as my pot is larger than it was despite being my main source of income for 3 years.

6. Even at the time there was scope to leave money in a tax efficient way to my children, which was not possible through my original scheme. With the recent changes in pensions it is now possible to leave a significant amount completely free of IHT. Indeed if the new rules stay in place, pension planning will dwarf the proposed increases in IHT exempt limits, so that even with the reduced lifetime allowance from next year it will be possible for a couple to leave £3m plus without paying IHT.

I don't regret the decision, but I accept it won't be possible to be certain I have been better off until I am dead. In the meantime I have had some fun beating the average fund manager (and a lot of them are pretty average at best).

report this

David McDonald

Sep 26, 2015 at 15:32

I have an uncrystallised personal pension with GAR benefits (which is diabolical: 50% dependant benefit, 3.8% return, have to live over 26 years to get the fund back) with my current pension provider Cooperative Insurance Society. At the last minute of transfer, they said it is Government 's rules and insisted I need to seek an IFA with G60 or AF3 to advise me about the risk of transferring of my pension pots to AJ Bell SIPP and (they would not accept my signed declaration) before they release the money. I just wondered is anybody out there can help or recommend someone who will do it without breaking the bank please.

report this

David Aston

Sep 26, 2015 at 15:51

David Mcdonald

I paid around £600 for advise, with a FCA registered IFA, to transfer a final salary pension. They are Medics Wealth Management in Tamworth,and the person I dealt with was a Mr Leigh Kent. The price was the best that I could find, and they do a pension analysis. I too transferred to AJ Bell Sipp. I hope that helps.

Mr Kent was extremely helpful.

Rember one thing, the requirement is to have advise, the contents are private between you and the adviser.

AJ Bell are the only Sipp providers I could find that will accept a transfer in which does not require an adviser to recommend a transfer, as most of the others require an adviser to say it is in your interest to do so. They are all frightened in case there are comebacks later like PPI.

Any problems email me on

report this

David McDonald

Sep 26, 2015 at 16:44

Hi Mr. Aston,

Really grateful for your prompt response. I was pulling out my hair as the transfer value is only guaranteed for 30 days. During the whole process of

transfer, I have been constantly contacting the Co-op to avoid the delay due to my past experience with their shambolic administrative procedure. They made all their FA redundant but the advisers on their pension section were not adequately trained. I was misled and misinformed in several occasions by some of them hence the transfer has been delayed. The last straw was just a day or two before the transfer, they came up with taking advice from an IFA. I can understand they are trying to cover their back but to omit this significant process (as it takes time to find an IFA who is qualified to arrange appointment) from the beginning, it is unprofessional and unethical.

I have already set up a SIPP with AJBell YouInvest. They have been helpful and proactively contacting the Co-op when it was needed. I just cannot wait to get out of the co-op administrative maze.

report this

David Aston

Sep 27, 2015 at 15:57

Mr McDonald,

I am glad that I have been of some help,

I hope you get what you are looking for.

Let me know how you get on via my email address.

Only trying to help others whom are struggling, and sharing my experience. I suggest you ring them and make sure they are qualified to help you with a transfer. As I said I had no problem with my transfer, however it depends on your transferring scheme, and how awkward they are and the obstacles you face. I did not want to pay an IFA if the transfer was not successful, however I decided to risk that amount.

report this

Brian Edwards

Jan 24, 2017 at 15:30

Hi Mr Aston, and Mr McDonald

I have just received the said IFAs terms of business and sadly things have now changed - their charges are £1500 plus 1% i.e. £2500 for a £100k transfer

report this

Brian Edwards

Jan 24, 2017 at 15:44

Does anybody know of a qualified IFA that will do the admin. for a transfer at a competitive rate?

report this

leave a comment

Please sign in here or register here to comment. It is free to register and only takes a minute or two.

News sponsored by:

The Citywire Guide to Investment Trusts

In this guide to investment trusts, produced in association with Aberdeen Asset Management, we spoke to many of the leading experts in the field to find out more.

Watch Now

Today's articles

Tools from Citywire Money

From the Forums

+ Start a new discussion

Weekly email from The Lolly

Get simple, easy ways to make more from your money. Just enter your email address below

An error occured while subscribing your email. Please try again later.

Thank you for registering for your weekly newsletter from The Lolly.

Keep an eye out for us in your inbox, and please add to your safe senders list so we don't get junked.

Sorry, this link is not
quite ready yet