@theFCA- #transfers-NOT GOOD ENOUGH


The FCA has produced a measured, thought-through but ultimately facile paper on transfer advice.

The FCA did not make it to the Great Pensions Transfer Debate and it is just as well that this paper was published after not before the 19th June.

For the paper really does little to protect the consumer, causes considerable disruption and fails to address the issues of those who have set up and run occupational pension schemes. If we had read it before going to Peterborough, I doubt our conference would have been as optimistic as it was.

This paper is a missed opportunity and here are 5 reasons why!

Here are the five things which should have been in the consultation but aren’t.

  1. A firm statement on contingent fees. The paper is silent, the FCA are pointing to COBS but AJ Bell are reporting over 50% of IFAs are effectively taking advice as commission from their in-house investment solutions
  2. Encouragement for trustees and scheme administrators to help IFAs through the creation of a single template questionnaire . Most of the timing problems on transfers come from non-standardised questionnaires.
  3. Encouragement for trustees to allow scheme rules to provide partial transfers so IfAs can split CETVs with an amount remaining for scheme pensions and the balance available for greater freedom
  4. Inclusion of adverts (digital or otherwise) promoting transfers as financial promotions (whether from lead generators or not)
  5. Prohibition on the use of leads generated from unregulated firms as a source of transfer business.

The FCA’s paper, which you can read here, is out of touch with the reality of today’s market.

Money is flowing out of occupational schemes at a destructive rate. One scheme which I am connected with is reporting outflows of £250m per month. Such flows are destabilising the investment  strategies of DB schemes, creating a severe strain on pension scheme administrators and destabilising the confidence of many people in the schemes they are relying on.

Much of the money flowing out of DB is doing so regardless of critical yields. I have in my possession three reports that have been forwarded me where the critical yields are in excess of 8%, one in excess of 10%. Add to these yields the costs of investment in full-priced SIPPS and you are needing over 12% pa or a return 10% over inflation to meet the scheme guarantees! And yet these reports are recommending transfer.

To suppose that the scoundrels who write this bullshit are going to be any more responsible because they assess covenants and use stochastic modelling is to be naïve in extreme. The abuse of customers which is rife abroad and bad enough at home will not be solved by requiring advisers to use more sophisticated report writing services.

This week, a group of good people have been in the high court listening to the arguments of QC as to what should become of what is left of their pension scheme. The scheme is called ARC and when they finally know what is theirs , they will move on to find out what they will have to pay in excess tax to get their benefits. The only people not in court are the villains who set Arc up, they are in Spain and similar – and they are still setting inappropriate pension schemes up and cajoling new cohorts of innocent decent people into them.

In the meantime, the funnels into which people’s retirement dreams disappear, are still open wide.



Google Ads , Facebook and the digital advisers of all the tabloids are selling digital space. This one sits on the Daily Mirror site , here’s one from Financial Advisor .co .uk

Ros Altmann, the scammers new best friend!

Worst of all, these very sites are now aping Ros Altmann, our former pension minister endorsing the liberation of guaranteed benefits. Ros has been quick to hail the FCA’s paper in a blog. 

But sadly Ros’ list looks  just a more sophisticated version of the scammers list! 


She is delighted that the FCA are no longer discouraging IFAs from rescuing people from failing DB plans but “waking up to the new landscape for pension transfers”.

The new landscape is one that most IFAs are very familiar with, it is the apple held out by Eve to Adam, delicious and offering untold knowledge. It is an apple that only too easily could see IFAs banished from Eden.

The last time Ros piped up on transfers she was widely broadcast . Look out for her latest blog to be abused in a similar way

ros abused.PNG

Careless talk…


Far from protecting consumers , with this paper, the FCA have just opened the door for the scammers and invited them to the table.

Where are you when you’re needed Ros?

Ros did not come to Peterborough for the Great Pension Debate. If she had, she would have heard close to 300 people involved on a day to day basis with transfer calculation/advice and administration thinking about the decisions “diversely, responsibly and capably”. I chaired and listened – I was hugely impressed.

Ros has not been seen at the High Court or spent time with those whose pensions have been ripped from them and who now face bankruptcy either from the trustees (much of the pension is out on loan) or from HMRC, who want 45% of invested monies, monies which are mostly gone).

Ros does not spend time with pension administrators or pension managers having to cope with the huge flows out of schemes created by what sometimes seems like panic-transferring.

Nor will she have to live with the long-term consequences of these transfers. The drawdowns that dry-up though poor strategies, high execution costs and unrealistic withdrawal rates. There are great advisers who will manage their businesses for 20 years and hand them on to other great advisers, but it is hard to pick them today.

In reality , most of the money coming out of CETVs is being invested in SIPPS which are likely to become destitute of good management over time. This is the awful prospect facing those who pay for advice on the cheap and accept the twaddle that charges don’t matter.

By ignoring these harsh realities, Ros and the FCA and the Treasury are allowing the conditions to spread that have led to the carnage in the nineties, have pension victims in the  high court today, and will doubtless lead to countless disappointed retirees in decades to come.

When doing nothing pays

There is another way of managing people’s money. It does not involve taking a CETV, it doesn’t even involve looking at a CETV, it simply involves people taking a scheme pension for the rest of their lives.

Instead of listening to scaremongering about BHS and Tata, people with defined benefits could ask their Trustees for a clear statement about the likelihood of their scheme paying benefits in full. They might even ask the Trustees for its most recent employer covenant assessment – or at least the edited highlights without confidentialities broken.

They would almost certainly find that their Trustees are well advised, that the scheme is either in surplus or has a proper deficit recovery plan and they may even find themselves being asked to become a trustee.

Instead of the provocative calls to actions from the scammers (which echo the blogs that Ros writes) people could see how much care and attention is paid to the management of the schemes from which they will get paid their pension. Far from being the greedy beneficiaries of your money, most trustees are unpaid and are acting out of a sense of duty. Those professional trustees who are paid are extremely accountable.

As for the FCA’s paper, it is an exercise in irrelevance. Everything in that paper is rehearsing what good advisers already know and do. Meanwhile scoundrels are doing untold damage and the FCA and tPR seem powerless to do much about it.

Another opportunity missed.

About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
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3 Responses to @theFCA- #transfers-NOT GOOD ENOUGH

  1. The Bear says:

    Good points, well made. Interestingly, I read the BBC headline (and presumably others will follow) suggesting the the FCA were [intending] implementing “tougher” rules. Tougher?!

    Poor old Public are the ones to suffer in all this. How do they read these messages? Nothing as opaque has happened since pension “Simplification”.

    I agree that there’s nothing (that I can see) which is new, with the possible exception of promoting the chaos and confusion level from TVA to TVC.

    If you’re not really going to do anything, why write a paper about not doing anything!

  2. Mark Meldon says:

    What I think is the most worrying thing about the “CETV Madness” is that I’m now seeing what might be termed the “trickle down factor”. Two real-life examples should illustrate what I mean.

    Firstly, I met a midwife the other day who is in a section of the NHS Scheme that allows her to draw her pension at age 55, which will be next year. Whilst she no longer has a CETV option, she had no confidence in her pension being paid “as the NHS is in trouble” Even though her notional fund turned out to be in excess of £660,000 and I carefully explained that she needn’t worry about her pension being paid, which I’m glad to say was accepted, she did tell me that “all of my colleagues” are taking the “enhanced” PCLS rather than the “standard” PCLS/Pension. This is nut as I roughly calculated that a net return of around 8% would be needed to match the index-linked pension foregone by taking the “enhanced” PCLS. When I asked her why she thought they were doing this she said that they thought it was “safer in the bank”. Oh, my!

    Secondly, I had an email from a client whose wife works for Tesco. She is in the DB Scheme and, again, has lost confidence in it “because all the senior management are transferring out as are a lot of my colleagues” . Again, I explained that with the combination of her husbands substantial DC fund are her DB and their state pensions they have a great combination of retirement income sources. Whilst she seemed satisfied with my explanation, she found it hard to understand that her “boss who took out £1.7m” might actually be very much the worse off for doing so, even though I have absolutely no idea about his circumstances.

    Pension Freedoms is slowly but surely corroding confidence in DB schemes and the Government – if we do indeed have one – need to reinforce the message that 9 in 10 people should “hold” not “fold”.

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