DB pensions changes – are you ready?

Can you believe we are at the end of March already? Time flies by when you have a million and one regulations to implement doesn’t it? The FCA has now released its Policy Statement following last years consultation paper. The aim of the new rules is to provide advisers with a framework that will enable them to give better, good quality advice.

They have also published the latest Consultation Paper (CP 18/7) for which the consultation period for this closes on 25th May 2018, (because there’s nothing else going on in the run up to that date….). The policy statement is currently scheduled for Autumn 2018.

So, what are the new rules?

Let’s get stuck into them!

Ready, Set, GO! (Starting assumptions)

Firstly, a not entirely unexpected good old U-turn from the FCA. The existing assumption that transferring away from safeguarded benefits will be unsuitable will prevail, rather than starting at a neutral point as previously suggested.

What do you recommend for me?

Every adviser has to make a personal recommendation with all that it entails (e.g. give regulated advice). This includes if the advice is to not transfer. You must fully explain why this is the recommended action and why it is suitable for the client.

I’m out

It is important that the Pension Transfer Specialist (PTS) checks all of the advice given to the client, (not just the numbers) and considers its suitability. Both the PTS and the adviser need to agree on the recommendation before it is presented to the client. If there is a disagreement, the disagreement and the new outcome need to be written and recorded.


TVASs are officially being replaced! They will be replaced with what is called an APTA (Appropriate Pension Transfer Analysis) and a TVC (Transfer Value Comparator). They always manage to make the abbreviations so similar. It’s like KIIDs and KIDs all over again. Anyway, you can use the new analysis from 1st of April 2018. It doesn’t become mandatory until 1 st of October 2018.

I’ll only be alive for another 20 years

The APTA must consider a reasonable period beyond average life expectancy. Currently, the life expectancy is commonly misjudged and runs the risk of the client running out of money.

Opt-outs (no, this is not for GDPR)

There is a requirement for advice to be given or checked by a pension transfer specialist, plus record keeping requirements.

Find the facts

Advisers must consider all the client’s circumstances.

Why not your workplace pension?

Workplace pensions must be routinely considered when providing advice.

I want to live the high life during retirement

If the client is too young to confirm a realistic retirement budget, a personal recommendation must not be made.

Think of the tax!

The adviser must consider the impact of crossing tax thresholds or brands and the availability of state benefits.

Save the benefits

Compulsory advice is being introduced for these and some of the requirements for DB Schemes will also apply to schemes with safeguarded benefits (e.g. Guaranteed Annuity Rates).


Under MiFID II inducements rules free software is dangerous. Most advisers remain responsible for the advice and should be conversant with how the various tools deployed work. In reality, it is best to avoid using ‘free’ TVASs from providers.


To add insult to injury, the new rules will apply as soon as the 1st of April 2018. Luckily the rules relating to the new analysis requirements doesn’t come into force until 1st of October 2018 and benefit re-evaluation assumption rules coming in on the 1st of April 2019.

Note: this is just a summary, details are to follow. We’ve got a whole 3 days to go yet!


  1. Understand these changes, apart from the exceptions mentioned above, they all apply from the 1st of April this year.
  2. Get to grips with the new analysis. It’s not mandatory until the 1st of October, but it will be good for you to get a head start.
  3. Make a checklist of what will change in your everyday work. For example, you will now need to:
  • Give personal recommendations to every client – consider how will you go about doing this that is the most cost effective and time efficient way to do this.
  • Start being realistic when it comes to life expectancies. People live longer now. Ensure you do not put your client at risk of running out of pension funds.
  • Always consider a workplace pension, if this is available.
  • Consider all the clients circumstances – make sure you have enough information.
  • Refuse to advise a client on a pension if they are too young to confirm their retirement income needs.