The British Airways pension scheme reported a doubling of transfer value requests after lockdown © Getty Images

Thousands of investors are struggling to obtain the specialist financial advice they are required to take before a pension transfer can go ahead, due to a shortage of professionals working in the area.

Over the past month, managers of “final salary” style pension schemes have reported a spike in requests from members seeking quotes on trading their future secure pension for a cash lump sum today. 

But experts say those seeking a financial opinion on the deal are finding this “extremely challenging” as the number of professionals offering specialist advice for defined benefit transfers has shrunk by one-third.

Why are more people looking to transfer their pensions?
Final salary or defined benefit (DB) pensions are considered “gold standard” as they provide a secure pension for life, based on salary and length of service, and typically continue to pay to a surviving spouse.   

For these reasons, the Pensions Regulator (TPR) says most people are better off keeping these valuable secure pensions.

But more people are exploring the option of trading their future pension for a cash lump sum today, known as a DB transfer, as economic uncertainty has been heightened by the pandemic.

The British Airways pension scheme has reported a doubling of requests for transfer values between April and September, compared with the same period a year ago, as lockdown disruption hit the economy and job worries increased.

“In times of crisis people want to explore their options,” said Fraser Smart, chief executive of British Airways Pensions, which has about 50,000 members who can qualify for a transfer. 

Most members of private sector DB schemes can transfer their pension pot to a defined contribution fund where the pension is not secured but can be taken, typically 25 per cent tax free, from the age of 55.

What advice must I obtain if I want to transfer my defined benefit pension?
Because DB pensions are considered valuable, the government requires those considering a transfer to obtain advice from a suitably qualified financial adviser regulated by the Financial Conduct Authority (FCA), before you can transfer your benefits to a DC pension scheme. This applies if the transfer value is more than £30,000.

However, the Personal Finance Society, which represents financial advisers, says many investors are struggling to find a suitably qualified adviser, due to a lack of availability.

Why is there a shortage of advisers?
Three years ago, there were more than 3,000 specialist transfer advisers operating in the UK market, according to the society, but this has shrunk to around 1,000 today.

Advisers left the market in droves after steep increases in professional indemnity cover, which provides insurance against compensation claims from customers for poor advice. Professional indemnity premiums jumped after the regulator raised concerns about the quality of the DB transfer advice it had seen, leading to fears of a mis-selling scandal.

“The impact of eye-watering PI premium increases, significant increases in excess or withdrawal of cover altogether has already had a profound impact on the availability of mandated regulated advice,” said Keith Richards, chief executive of the PFS.

“Anyone looking for DB transfer advice today will find this extremely challenging.”

What can I do if I want to get transfer advice?
In the short term, experts do not see an end to the capacity crunch in the DB transfer advice market. In fact, the situation may worsen as insurers continue to increase PI cover.

However, if you are keen to explore your options, the government-backed Money Advice Service (at has an online directory of FCA-registered organisations where you can search for a retirement adviser.

Growing numbers of businesses are also now providing access to a regulated financial adviser in the workplace — vetted by the employer — so it is worth checking if this is a suitable option.

Be warned, however, that the advice may cost you thousands of pounds upfront. With very few exceptions, advisers must charge for their advice from October 1, whatever your decision on transferring.

Transferring a DB pension is a life-changing decision which must be carefully considered so it is important to get good quality advice if you are weighing this option.

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