ADVISERS EXPECT CONCERN FOR DB SCHEME VIABILITY TO RISE

  • Nearly six out of ten advisers believe client concerns about future DB scheme viability will increase
  • Close to two-thirds of advisers are concerned about the on-going viability of some DB schemes
  • Over half of advisers have seen an increase in demand for DB transfers into SIPPs 

Client concerns about the future solvency of their Defined Benefit (DB) pensions schemes is adding to the demand for transfers into SIPPs believes Momentum Pensions.

Its research found that nearly six out of 10 (57%) specialist retirement advisers believe that clients concerns about future DB scheme viability will increase this year, encouraging an acceleration of transfers into SIPPs.

Its recent study also found that close to two-thirds (63%) of advisers themselves are concerned or very concerned about the on-going viability of some client DB schemes. 

Momentum’s research also confirmed the growing demand for transfer advice with over half of advisers (55%) in the nationwide survey having seen an increase in demand for DB transfers into SIPPs this year.

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Momentum supports the FCA’s consultation paper (CP) 17/16 Advising on Pension Transfers and the numerous changes it proposed including the need for compulsory financial advice for DB pensions with a transfer value in excess of £30,000.

However, John McCreadie, Head of Sales (UK), Momentum Pensions, believes that advisers need support: “Advisers clearly believe that DB scheme viability is a major issue and so do their clients.

“Recent industry figures valued DB pension liabilities held by small and medium-sized enterprises jumped 7.5 per cent to £4.3 billion in 2016.  Low interest rates, increasing life expectancies and rising costs are headwinds for future final salary scheme solvency and are added concerns to retirement advisers and their clients.

“Market data indicates that around £50 billion has been moved from DB schemes by a total of 210,000 members since April 2015. The growth in transfer advice is placing unprecedented demands on advisers who need unwavering support from SIPP providers to ensure the SIPP meets their clients’ future retirement needs. This means robust due diligence procedures, clarity on charges as well as the widest choice of investment options and deep technical support.”

Momentum’s transfer options include a range of flexible solutions, with charges that are simple, well priced and fair.  The Momentum Core SIPP offers a panel of investment providers with platform, DFM and Trustee Investment Plan options that should facilitate the type of individual approach to investment advice proposed by the FCA in their DB transfer consultation.

Momentum has taken a dynamic approach to the development of its SIPP range which is designed to evolve with clients as their investment requirements change, enabling investors to move between the products, free of charge, when they need to. The new range comprises of:

  • Momentum Core SIPP: Standard SIPP with a panel of quality investment providers.
  • Momentum Property SIPP: Designed for those who want commercial property investment with a clear fee structure.
  • Momentum Advanced SIPP: Open architecture SIPP for those with more sophisticated investment needs.
  • Momentum International SIPP: SIPP specifically designed for the needs of non-UK residents.

Momentum has a pedigree in the SIPP market stretching back over 20 years and is established as a top 20 provider in the UK.

The Momentum SIPP Range is administered in Sale, Manchester and is backed by a highly skilled team with extensive servicing and technical expertise, including property transactions, within the specialist pension market.

 It was the first company to offer the option of switching for free within a multi-jurisdictional proposition.

Research was conducted in February 2017 by PollRight to 107 advisers specialising in pensions planning.

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