Standard Life has called for the partial transfer option to be made a mandatory requirement in the FCA’s upcoming Defined Benefit (DB) regulations, to ensure consumers can have greater flexibility in what they do with their retirement income and enable advisers to tailor their advice to deliver a better outcome for their clients.
Rather than the “all or nothing” approach of either full transfer or no transfer, a partial transfer could be the best option in many instances.
Alastair Black (pictured), Head of Financial Planning Propositions at Standard Life, says: “The DB to DC conversation isn’t going away. So far it has been very black and white, but it doesn’t have to be ‘all or nothing’. For many, the flexibility of freeing up their pot of DB money is very attractive, but the challenge is giving up the guarantees offered by a DB pension. However, with a partial DB to DC transfer they could have a mixture of both, retaining some guaranteed income with the scheme, while taking some risk to provide the greater flexibility they are looking for. This could be a really good solution for many retirees.”
“The FCA consultation is an important exercise in reaffirming good practice which we absolutely welcome. We would like to see it go that bit further and use the opportunity to embed the value of partial transfers in the regulations, so that a partial transfer must always be considered as an option for consumers during the advice process. We recognise that some schemes offer this and others don’t and that’s down to the decision of scheme Trustees. Embedding the requirement in the DB regulations on advice for it always to be considered as an option will ensure it is used appropriately where available.”
“If partial DB to DC is more embedded in the advice process, we would expect to see more people deciding to opt for a mix of guaranteed and flexible income at retirement, rather than facing an all or nothing stalemate.”