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DB pensions transfers market ‘not working as effectively as it could’

4 July 2019

The defined benefit advice market is not working as effectively as it could with the supply of advice continuing to fall short of consumer demand, according to new research by Aegon. 

Three quarters of advisers surveyed believe supply is being hampered, while 89% of advisers who are or have been active in advising on DB schemes, say there are still many individuals who would benefit from taking advice.

Over half of advisers (55%) said demand from pension savers wishing to explore their options remains high. However, only a third  (36%) of advisers feel there are sufficient numbers of advisers to meet the current level of demand.

In response to the FCA clampdown on DB transfers advice, an overwhelming 69% of advisers described the regulator as erring too far on not recommending transfers. It follows the FCA’s latest update, published earlier this month, which said it found the number of DB members being advised to transfer “deeply concerning and disappointing.”

Six in ten advisers (58%) also believe the market is being impacted by the lack of effective triage facility, with advisers unable to have a personalised discussion with a client to determine whether it is appropriate to offer full transfer advice.

Steven Cameron, pensions director, Aegon, said of the findings: “Whilst transfers volumes have declined from a peak at the beginning of last year, demand for such advice remains high and continues to outstrip supply.

“Transferring is not the right way forward for the majority of people with DB pensions, but the market is not working effectively if people are unable to obtain advice to even explore their options. This means it’s important to resolve the current issues including PI difficulties which are discouraging advisers who are active in this market from continuing to offer DB advice.”

Cameron said Aegon was “particularly supportive” of introducing a form of triage that would allow advisers to offer members some initial help to decide whether it was worth progressing with full advice.

He added: “Unless the current log jam is eased we’ll be left with an increasing number of people whose advice needs can’t be met because of a lack of supply, leaving them unable to explore their options, a situation which is in no one’s interest.”

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