FSA publishes new guidelines on pension transfers

The Financial Services Authority has published new guidance today which may mean advisers will be less able to recommend a pension transfer. The guidance affects consumers looking to leave a defined benefit scheme and transfer their money into a personal pension. The FSA is concerned that pension transfers are not in the best interest for many scheme members and is changing the way transfers are calculated. By raising the standards on assumptions used to calculate pension transfer value analysis, it is less likely advisers will be able to recommend a transfer. The guidance follows a consultation period in February on issues such as annuity rates, CPI-linked pension increases and mortality. One of the new rulings concerns CPI-linked benefits which will now be valued using a CPI-linked annuity rate which the FSA hopes will accurately reflect the benefits members would be giving up by transferring their funds. Sheila Nicoll, director of conduct policy, said: “In the vast majority of cases someone in a defined benefit pension scheme will not be better off transferring to a personal pension. The new assumptions will make it tougher for advisers to make the case for a transfer. “As a result of these new rules, we would expect the number of pension transfers to decrease, leaving pension scheme members better off.” The new rules will be effective from 1 May. • Want to receive a free weekly summary of the best news stories from our website? Just go to home page and submit your name and email address. If you are already logged in you will need to log out to see the e-newsletter sign up. You can then log in again.

FSA publishes new guidelines on pension transfers

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