Figures reported in the FT show that whilst the value of pensions transferred reduced last year, it still amounted to a whopping £33 billion. It’s also widely predicted that most of those transfers were out of Final Salary (also known as Defined Benefit) schemes. But, towards the end of 2018 the FCA found that only 49% of advice given to transfer out of a Final Salary pension was suitable.
If you have a Final Salary pension, you too might be tempted to accept a seemingly generous cash-equivalent transfer value. However, forfeiting a lifetime of guaranteed retirement income is, in the words of Megan Butler, Executive Director at the FCA; “one of the most complex financial decisions a consumer may have to make” and that “it is vital customers get high-quality advice.”
So, how do you get the best Final Salary pension advice? You need to endeavour to find the best Financial Planner with the right qualifications. To help you do that, here are three top tips… or ‘life hacks’, if you’re a millennial!
1. Look for the Pension Transfer Gold Standard
Very recently, the Pensions Taskforce (an industry-wide representative body) launched the Pension Transfer Gold Standard to help consumers identify high-quality Final Salary pension advice. The Gold Standard is a voluntary code of good practice, based around nine core principles:
- Helping you to understand when advice is appropriate
- Ensuring the advice we give supports your overall wellbeing in the context of your stated objectives
- Ensuring your understanding and acceptance of all charges
- Ensuring the most appropriate and up-to-date technical skills are applied
- Transparent management of ‘conflicts of interest’
- Helping you understand the cost of transferring benefits
- Avoiding unregulated investments and introducers
- Transparency in advice processes and outcomes
- Promoting the Consumer Guide to the Pension Transfer Gold Standard
The Gold Standard status gives you the confidence that you’re dealing with a business and a financial planner that goes above and beyond the standard requirements to provide Final Salary advice.
Proudly, at Foster Denovo, where I’m one of our licenced defined benefit pension transfer partners, we have been accredited with this standard. This means we must always:
- Possess the regulatory permissions for provisions or pension transfer advice. This means we have demonstrated high levels of the financial and technical knowledge required to give you appropriate advice on Final Salary transfers.
- Not currently be under any form of ongoing regulatory sanction by the regulator or accredited body in this field of advice. So, you can have the peace of mind that we work to the highest standards possible.
- Have adopted all nine principles of the Pension Transfer Gold Standard, without exception.
By working with financial planners who have voluntarily committed to such high standards, you can be confident that you will receive the best possible Final Salary advice, service and support.
2. Reviews and testimonials
Thanks to social media like LinkedIn and Twitter, it’s never been easier to review our experiences. Reviews and testimonials from existing clients can be incredibly helpful when trying to find the right financial planner.
Even a planner relatively new to the profession should have delighted clients prepared to support them. And, if you believe online testimonials to be a little one-sided or ‘cherry-picked’, VouchedFor is completely impartial. Reviewers’ identities are verified and negative remarks do not get removed. You can read real-world experiences, warts and all.
3. Awards and accolades
There are a many different awards in the financial services profession. If your financial planner or the firm they work for has won any, it’s highly likely they’ll be mentioned on their website. Foster Denovo, for example, is multi-award winning. Just scroll down the homepage to see for yourself.
And speaking of VouchedFor and real-world experiences, I was delighted to be named as one of the UK’s ‘top-rated’ financial advisers, based on VouchedFor reviews. The list was published in The Times newspaper on Saturday 23rd February 2019.
All advisers on the list must have received at least 10 genuine reviews with a minimum rating of 4.9/5 during 2018 and have been checked and fully vetted by VouchedFor.
Many of the awards and accreditations in financial planning are based on technical knowledge or the ability to pass an exam. Both are incredibly important, but I was particularly pleased to be included on a list based on the experiences of real people I have helped.
Should you transfer your Final Salary pension? There’s only one way to find out. Follow these three tips, find a financial planner who fits your criteria and give them a call.
Accessing pension benefits early may impact on levels of retirement income and your entitlement to certain means tested benefits and is not suitable for everyone. You should seek advice to understand your options at retirement.
Fund values may fluctuate and can go down, which would have an impact on the level of pension benefits available.