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I was going to open by commenting that it’s the time of year when the budget rumour mill starts kicking into action, but of course this will only be the second Autumn Budget, so we’re more accustom to these things happening at the start of the year.
Over the last few weeks I’ve had a much higher than usual number of ‘interesting’ transfer out requests land on my desk. Maybe it’s the hot weather getting to people, but it’s curious how these things seem to be like buses – nothing for ages then all at once.

Transfers out to unknown schemes can cause providers a lot of headaches, and we’re largely in a no-win situation. There’s a lot of extra work to be done and at the end of it we either end up losing a customer or having one who’s a bit annoyed at having to stay put.

The recent Ombudsman ruling, Mr N v The Police Pension Scheme, shows the importance of completing appropriate due diligence for the transferring scheme – and the harsh consequences of getting it wrong (the scheme has been ordered to reinstate the member’s accrued benefits).

The most common type of “unknown” scheme we get requests to transfer to, are SSAS. A transfer to a scheme with a known SSAS provider involved can be fairly straightforward, but there are many DIY schemes with no other parties taking responsibilities. In most cases the individual hasn’t just taken it upon themselves to open a SSAS, there’s someone in the back ground recommending the course of action. Now this could be for legitimate planning purposes, or for something less above board.

We also get cases where our gut feel isn’t necessarily that someone is trying to pull a fast one on the client, but rather there’s just a handful of people involved who don’t understand pensions, so there’s a high risk of the scheme inadvertently falling foul of HMRC rules. On one of our recent cases we had two parties both saying the other was the Scheme Administrator, and denying it was them – which begs the question who’s reporting anything to HMRC?

As well as looking at the scheme and any other parties involved in the transfer request, it’s also important to look at the member’s history. Anyone washing funds in and out of a pension in a short space of time can be a red flag unless there is good cause.

The Pension Scams Industry Group (PSIG) have recently updated their Code of Good Practice, which gives some great pointers as to what providers should be looking for and questions to ask.

If you are advising on a transfer to a less well known scheme then you should be prepared for a few extra questions, and plan time in for the provider to complete their checks. On the plus side, the fact that there’s an FCA regulated adviser advising will add weight to the case for transfer.

Lisa Webster is technical resources consultant at AJ Bell
The Upper Tribunal has upheld an FCA decision to fine and ban Alistair Burns, chief executive of advice firm TailorMade Independent Limited, as it was confirmed that the FSCS compensation bill for his failed business could hit £106.5m.

Pension transfer values - as measured by the XPS Pensions Group Transfer Value Index - fluctuated “mildly” during June 2018 with a small fall during the month, says the firm. 

The index was £234,000 at the end of May and £233,000 at the end of June.

The difference between maximum and minimum readings of the Transfer Value Index over June was £4,400 (or around 1.9%).

The index tracks the transfer value that would be provided by an example DB scheme to a member aged 64 who is currently entitled to a pension of £10,000 each year starting at age 65 (increasing each year in line with inflation).

XPS points out that different schemes calculate transfer values in different ways so a given individual may therefore receive a transfer value from their scheme that is “significantly different” from that quoted by the index.

Sankar Mahalingham, head of DB Growth, XPS Pensions Group, said: “Transfer values have been stable over the first half of 2018, during which the Index has fluctuated by only £8,300 (or around 3.6%).

“If we compare this to 2017, when in both halves of the year the index fluctuated by £14,000 (or around 6%), we can see that although transfer values remain close to historic highs in 2018, there has been a notable reduction in volatility.

“Given the recent UK political upheaval and its potential impact on the approach to Brexit, coupled with the changing global political climate (for instance in relation to possible escalation of trade wars), it remains to be seen whether this low volatility in markets and transfer values will continue over the coming months.”

XPS Pensions Group claims to be the largest pure pensions consultancy in the UK, specialising in pensions actuarial, investment consulting and administration, with revenues of over £110 million. The parent company is also a significant SIPP provider.

The company works with over 1,200 pension schemes, including 25 with over £1bn of assets, and undertakes pensions administration for over 600,000 scheme members.


O&M Pension Advice is to cease activities as an Introductory Pension Transfer Advisory service.
National IFA LEBC The Retirement Adviser has called for clarity for consumers considering pension transfers.
The Financial Services Compensation Scheme has listed 11 failed advice firms it declared in default in March in a move which will mean some British Steel Pension Transfer clients being compensated.
MPs call on FCA to ban contingent fees on DB pension transfers and establish an easy-to-use online register of pensions advice firms, MPs have demanded.
An ex-adviser who turned client and says he lost £30,000 due to a pension transfer delay has been successful in his complaint against Intrinsic Financial Planning.
Pension transfer values remained high during 2017, figures showed today.

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