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Consumers will be required to take advice before transferring out of a DB scheme and it will be the responsibility of trustees to check that people have taken advice. Christopher Woolard, director of strategy and competition at the FCA said: "The new pension flexibilities bring about added choice for consumers. Defined benefit (DB) schemes pose particular issues and we need to ensure that those who are considering moving away to other arrangements are fully aware of the potential benefits they are giving up. In many cases transferring from DB to defined contribution (DC) may not be in the member’s best interests and ensuring independent advice is taken is an important protection."
The FCA is consulting on changes to its rules following a proposed amendment to the Regulated Activities Order that will make advising on the conversion or transfer of safeguarded pension benefits, which are benefits other than money purchase or cash balance benefits, into flexible benefits, a regulated activity.
The FCA will also now require those advising on pension transfers to have the pension transfer specialist qualification when giving advice on all transfers from DB to DC regardless of when the transferred benefits are being accessed.