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Defined Benefit

Top 10 tips on DB transfers

Understand the rise in demand for advice on DB transfers.
Learn the pros and cons of recommending DB transfers to clients.
Comprehend the questions to ask clients to help them make the right decision.

CPD

Approx.30min

By Les Cameron

Les Cameron is head of technical at Prudential

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More on Defined Benefit

DB transfers rise to highest level in 11 months
DB complaints are increasing: what should advisers do?
DB transfers fall to lowest level in more than 6 years

CPD

Approx.30min

Please answer the six multiple choice questions below in order to bank your CPD. Multiple attempts are available until all questions are correctly answered.

Why are many concerned about giving advice on transfers from DB schemes. Why is this?
Because of the potential for future regulatory scrutiny should poor customer outcomes emerge.
Because most advisers do not understand what a DB scheme is.
Because it is such a personal subject to discuss with a client.
Because it is not a profitable area of advice for advisers.
Which one of these is not a step in calculating the cash equivalent transfer value?
Pension at date of leaving service is calculated
This is re-valued by statutory requirements/scheme rules to normal retirement age
The capital cost of buying the re-valued amount is identified using reasonable annuity rates
The capital cost is divided by the number of years the client has to live to arrive at today’s transfer value.
What shape is income likely to take in retirement?
The client will need a fixed amount of income that increases by inflation until death.
May start high as they enter retirement, get lower the longer it goes on and then possibly increase as care needs/ill health takes hold.
The client will need more income earlier in retirement and less the older they get.
Clients should just be prepared to have no idea what shape their income will take in retirement.
The maximum allowed cash from a DB scheme is broadly what percentage of the amount being crystallised?
15 per cent
25 per cent
35 per cent
50 per cent
DB death benefits, especially for deferred members, are generally what?
Good value and available to a wide range of people
Poor value but widely available
Good value but not widely available
Poor in both value and those who can receive them
The health of pension schemes has been the subject of much comment recently and could lead to a client who may want to transfer out for what reason?
Because they believe their scheme is 'in danger'
Because they believe there is a profit to be made
Because they have regulatory concerns
Because it is hard to tell how expensive or cheap they are

Nearly There…

You have successfully answered all the questions correctly, well done!

You should now know…

Understand the rise in demand for advice on DB transfers.
Learn the pros and cons of recommending DB transfers to clients.
Comprehend the questions to ask clients to help them make the right decision.

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Top 10 tips on DB transfers

Why are many concerned about giving advice on transfers from DB schemes. Why is this?

Which one of these is not a step in calculating the cash equivalent transfer value?

What shape is income likely to take in retirement?

The maximum allowed cash from a DB scheme is broadly what percentage of the amount being crystallised?

DB death benefits, especially for deferred members, are generally what?

The health of pension schemes has been the subject of much comment recently and could lead to a client who may want to transfer out for what reason?

Nearly There…

You should now know…

I completed this CPD in

Were the stated learning objectives met?

Why weren't they met?

What did you learn from undertaking this CPD exercise?

Why did you undertake this piece of learning?

Any comments about this article or FTAdviser's CPD in general?

Banked!

Already Banked!

DB transfers rise to highest level in 11 months

DB complaints are increasing: what should advisers do?

DB transfers fall to lowest level in more than 6 years

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