Transfers of Occupational Schemes


Transfers of Occupational Schemes at the point of retirement for immediate vesting should always require sign off from a Pension Transfers Specialist. So says the FCA according to an article in Money Marketing. But there is no deferred benefit transfer, so you could once have argued that there should be no obligation.  But no longer.

And with the HM Treasury trying to increase access to advice, pension experts are dealing with a boom in requests. 

But are transfers at point of retirement (ie to vest) from Occupational pension schemes really classified as requiring specialist sign off?  The new rules no longer refer to deferred benefits so you can no longer argue any other way. 

And the rules on safguarded rights are even more complex now. 

Since the FCA has confirmed changes to the pension transfer rules (PS15/12) there has been continued uncertainty over the definition of safeguarded benefits what is and isn't included and what permissions are required in order to be able to advise in different scenarios. The situation has not been helped by the legislation defining safeguarded benefits in the negative as below:-

"safeguarded benefits" means benefits other than:
a.    Money purchase benefits, and
b.    Cash balance benefits

The collective industry thinking is that safeguarded benefits therefore includes Defined Benefits and guaranteed pensions such as Guaranteed Minimum Pensions (GMPs) and Guaranteed Annuity Rates (GARs) The inclusion of GARs under the safeguarded benefits definition has been contrary to our own understanding and interpretation of the policy statement above. There would appear no obvious indication that protected or enhanced tax free cash entitlement falls under this definition.

Although GARs are deemed as safeguarded benefits section 19.1.1 of COBS confirms that pension specialist requirements are not required where GARs are the only safeguarded benefits when providing transfer or conversion advice. So yes you need to change your permission but no, you don't need to be a PTOO to do it! Confused? Well the industry is ironing out these issues bit by bit.

Where the value of any GARs is in excess of 30,000 legislation requires advice to be given. This does not require pension specialist requirements however, just the permission.

To confirm:

  • Safeguarded benefits are deemed to be Defined Benefits and guaranteed pensions such as Guaranteed Minimum Pensions (GMPs) and Guaranteed Annuity Rates (GARs)
  • Occupational specialist requirements - eg sign off etc - are required when transfer or converting safeguarded benefits unless these are GARs and the only safeguarded benefits within the plan. But in both cases you need the permission.
  • Advice must be given when transferring or converting GARs if value above 30 000 but the transaction does not need to be completed by a pension transfer specialist it only needs the extra license.
  •    Advice to transfer Occupational DC pension schemes without safeguarded benefits can be transacted without the need for a pension transfer specialist.

If you are not a pension transfer specialist then you will be unable to transact occupational transfer business. If however a firm has a pension transfer specialist other RIs within the same office who are not suitably qualified would still be able to transact occupational transfer business. This is on the assumption and understanding that reporting and processes are appropriately overseen by the pension specialist.

So there you have it: although you need the licence to transfer GARs you will not require specialist sign off.

We do pension transfers at IFAC Ltd - through licenced affiliates, giving you an easy method to outsource non-profitable and high risk work.

We also do file checks at 500 for this work and pre sale checks at 100 for this type of work.

Remember the impact on your PII.  We recommend that you outsource to IFAC