FSA publishes new rules to ensure pension transfers are suitable for scheme members
The Financial Services Authority (FSA) has published new rules and guidance, to strengthen the protection for members of defined benefit pension schemes who are considering moving their money into personal pensions.
The changes are designed to deal with the FSA’s concern that in most cases a pension transfer is not in the best interest of pension scheme members.
The FSA is raising the standards on the assumptions used when a pension transfer value analysis (TVA) is made. This will make it less likely that an adviser will be able to recommend a transfer from a defined benefit pension scheme to a personal pension.
Respondents to the consultation welcomed the changes and there was broad support for updating and clarifying the assumptions.
Sheila Nicholl, director of conduct policy at the FSA, 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.”