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UK’s Prudential to enter DB transfer advice market

UK insurance giant Prudential said it will begin offering clients advice on the increasingly contentious area of defined benefit (DB) pension transfers.

UK's Prudential to enter DB transfer advice market

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The move comes just weeks after the Financial Conduct Authority issued a warning to firms involved in the rapidly growing pension transfer market to be more careful about which assets they put their client’s money into when transferring funds out of DB schemes.

It also follows on the heels of an announcement by the FCA that it had ordered financial advice firm deVere and Partners UK to “immediately cease” providing third party companies with transfer value analysis (TVAS) reports or other similar reports of information “designed to assist third party companies in transferring customers DB pensions to an alternative arrangement”.

In a statement on Thursday, Prudential said its financial planning unit “has introduced a team to offer customers advice about transferring defined-benefit (DB) pensions following approval from the FCA in October 2016.

“The service is restricted to clients who hold deferred pensions and are close to taking their benefits,” it said.

DB advice rule

The pension freedoms, which were introduced in 2015 to allow people aged over 55 greater access to their savings, required those with defined benefit plans, which pay them a proportion of their final salary as a pension for life, to seek professional financial advice.

Section 48 of the Pension Schemes Act 2015 requires trustees or scheme managers to check that advice has been taken before allowing a transfer to proceed where it involves a DB pension or other safeguarded benefits worth more than £30,000 ($37,318, €34,770).

According to the latest data from the FCA, over 500,000 pension pots have been accessed by customers since October 2015, though the data did not distinguish between DB and defined contribution (DC) schemes.

 

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