The Financial Conduct Authority (FCA) and The Pensions Regulator (TPR) have produced a factsheet for savers who have a defined benefit (DB) pension.
The plain English factsheet, published on Friday:
- tells savers they do not need to rush a decision about their pension and should get advice first
- reminds DB pension holders that transferring into another type of arrangement is unlikely to be in their best long-term interests
- highlights the risks to savers of transferring out of a DB scheme
- tells them the steps they can take to make sure they make an informed decision
- explains what they should expect when they get financial advice on a DB transfer
- informs savers where they can get free, impartial guidance about their pensions from the Money and Pensions Service (MaPS) and The Pensions Advisory Service (part of MaPS)
Charles Counsell, chief executive of TPR, said, “Leaving a defined benefit (DB) pension is one of the most significant financial decisions savers can make and so our joint factsheet is a really important tool to alert them to what they may lose if they take this step. It also explains the key things to consider before seeking advice on a DB transfer.
“For most, switching from a DB scheme is unlikely to be in their best long-term interests. They may lose a guaranteed retirement income and pension protection if an employer goes bust.
“Savers should not rush their decision and should seek FCA-regulated advice first before making a move that can’t be reversed. People with a transfer value of over £30,000 must by law get advice before moving their money.”