Pension transfers set to fall under tougher rules
The Financial Services Authority (FSA) said it expected the number of pension transfers to decrease as a result of its tougher guidance.
The changes are intended to strengthen protection for members of defined benefit pension schemes, following concerns from the watchdog that in most cases a transfer is not in their best interests.
Advertisement
Hide AdAdvertisement
Hide AdThe FSA has estimated that its changes will prevent an under-valuation of benefits of up to £20 billion.
It has said employees must receive a “fair deal” as firms are increasingly looking to cut their liabilities by offering members of defined benefit schemes a move into a personal pension.
Sheila Nicoll, FSA 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.”