The Gold Standard for Defined Benefit Transfers

In 2018, a parliamentary select committee revealed that thousands of British Steel pension scheme members had been “shamelessly bamboozled” into transferring their pensions to unsuitable funds with high charges.

Nearly a quarter of pension transfer advisers in the UK left the market following this episode and the number of firms offering advice has continued to shrink as firms have found that their Professional Indemnity Insurers (PII) insurers are no longer willing to cover them for defined benefit pensions advice amid fears of miss-selling.

So, how is the profession serving clients and which advisers are serving them?

The Personal Finance Society (PFS) Gold Standard is a voluntary code of good practice for safeguarded and defined benefit pension (DB) transfer advice, based around a set of principles.

Firms can adopt and promote this standard and principles, so consumers can better understand and find good advice, and be confident they are dealing with a firm that is going beyond minimum requirements when giving financial advice. We are very proud to hold the Gold Standard as well as being one of a select group of financial planning firms permitted to advise on DB transfers.

As a member of a defined benefit pension scheme (or pension scheme with safeguarded benefits) we hope the Gold Standard enables you to better understand what good advice on managing your pension looks like.

Please be aware that the Financial Conduct Authority (FCA), the regulator of financial advice firms, maintains the view that the value of guaranteed benefits available to members of a defined benefit or final salary pension scheme are such that for most scheme members a transfer to a money purchase arrangement, where you take on the investment risk of your pension fund, is unlikely to be in your best long-term interests.

Financial advice firms which adopt the Gold Standard have committed to an advice process that is underpinned by adherence to nine principles. These are designed to empower you to:

• Make an informed decision on whether a transfer of your pension benefits is appropriate for you
• Help in understanding what good advice in this area should look like
• Find an advice firm which has already adopted the Gold Standard

As a member of the Personal Finance Society (PFS), we feel the words of Keith Richards, the CEO, capture the value of and importance of this highly regulated group of advisers:

“The Pension Transfer Gold Standard helps consumers better understand what good advice looks like and where they can find it, we believe it will represent significant progress towards avoiding a repeat of negative events such as the British Steel debacle of 2018.”

If you have advice needs relating to your pension, then please contact us by email at [email protected] or call us on 01206 321045 and we will arrange for you to have a free initial consultation with one of our advisers.