Drawdown  

How to help clients make a drawdown transfer

  • Explain the required conditions for doing a partial or full transfer
  • Explain how to transfer crystallised pensions
  • Explain how statutory permissive override works
CPD
Approx.30min

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The statutory permissive override can be useful here if the member’s scheme doesn’t offer beneficiary’s drawdown. 

Investment pathways 

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From 1 February 2021 whenever a drawdown transfer is made there will be a requirement for advisers to consider the suitability of pathway investments when advising on investment of the drawdown fund.

This requirement is regardless of whether new investments are being made, or whether the transfer is in specie with no changes. It also applies even if the new provider doesn’t offer pathways due to meeting the exemption. In this scenario the onus is on the adviser to consider other pathway investments available elsewhere. 

Assessing Suitability Review 2

In its business plan for 2019/20 the FCA outlined its intention to review the market for pensions and investment advice for the second time under the title “Assessing Suitability Review 2”. 

This will focus on advice around retirement income.

The aim had been for the results of this review to be published this year, but like many things in 2020, this is currently on hold.

This work will resume though, so advice on drawdown transfers will be coming under scrutiny in the not too distant future.  

Lisa Webster is a senior technical consultant at AJ Bell

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.

  1. True or false, despite the “all or nothing” requirement for crystallised funds, it can still be an option for drawdown funds.

  2. What are the exceptions that allow drawdown funds to be split?

  3. True or false, with a partial annuity purchase, where an existing drawdown fund is being used to purchase an annuity the member does not have to use all the crystallised fund.

  4. In addition to drawdown funds having to stay together on transfer, what else do they have to be?

  5. According to Lisa Webster, in what circumstance does he say the statutory permissive override can be useful?

  6. From which date will there be a requirement for advisers to consider the suitability of pathway investments when advising on investment of the drawdown fund whenever a drawdown transfer is made?

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You should now know…

  • Explain the required conditions for doing a partial or full transfer
  • Explain how to transfer crystallised pensions
  • Explain how statutory permissive override works

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