Five ways international pension transfers are changing
By Will Grahame-Clarke, 14 May 18
Pension transfers are “good business for good advisers”, according to Old Mutual Wealth, which has produced a five step best practice guide for international advisers.
Launching the guide David Denton, Old Mutual’s head of sales Europe, told delegates at the Feifa (Federation of European IFAs) Spring Conference on Monday of an increasing trend toward transfers.
In the year to March 2017; 80,000 individuals transferred from defined benefit to defined contribution. For the same period ending March 2018, 100,000 are expected to have transferred.
Based on this growth, Old Mutual estimates 25-30% of all people, who are eligible to transfer, will transfer from defined benefit schemes in 10 years’ time.
Denton described how the quantitative easing policy of gilt buybacks had an inverse relation to transfer values. If gilt yields go down, transfer values go up.
“If we see an increase in gilt yields and base rates then maybe we have seen the top of transfer values,” said Denton.
“It is Old Mutual’s view, if [an individual’s] conditions are right for you to transfer, then now is probably a good time.”
Denton also noted that on the flip side of this, many schemes are significantly underfunded, casting doubt on their ability to keep paying out to members.
“It is not surprising with the high-profile scheme failures that people are looking around and wondering – will I get full value?”
Working with the Chartered Institute of Insurance, Denton said Old Mutual had trained 860 UK-based pension transfers specialists, from whom the five-step guide DB Transfers – The Five Best Practice Steps has originated.
It outlines the latest transfer process, which came into effect in April 2018, in comparison to the previous rules, and the incoming rules coming into effect on 1 October.
With the incoming requirement for advisers to work hand in glove with pension transfer specialists, Denton said it was crucial advisers understood both sides of the process.
Highlights for international advisers include:
Tags: DB pensions | Old Mutual
Christopher Lean says:
This assumes that there will be sufficient UK advisers either willing or, indeed, able to advise on DB transfers, particularly for non-UK advisers. Many will not have yet had their PI renewal terms. Far from an increase in transfers, there may be a levelling off or a decrease.