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Five top tips to guide a smooth transfer

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Following the launch of the new DB Transfer Guide, released on the 8th July 2019, PASA thought it would be helpful to cover five key elements which contribute to a positive member experience and outcome, focused unashamedly on the member perspective.

As the Chair of the Transfers Working Group I have been fortunate to see first-hand the enthusiasm of our industry to contribute to positive member experiences and outcomes.

Step 1 – Early, clear and informative communications
Managing member understanding and expectation is key. Help members understand what’s involved by setting out:
·       The time you will take to issue the guaranteed transfer value “CETV”, together with a clear explanation of the process.

·       Encourage the member to go and seek out other industry guidance that will support the member. Examples of this are:

§ The Money & Pension Service, including Pension Wise;
§ The Pension Transfer Gold Standard of the Personal Finance Society;
§ Guidance on pensions scams “PSIG”.

Step 2 – Regular updates
When issuing communications or acknowledging something has been received, make sure you set clear instructions around what the next steps are and expected timeframes. If there has been a delay, or there is expected to be, explain why and set out updated timeframes.

Step 3 – Positive engagement with Financial Advisers
Most members, due to the size of their pot being over £30,000, will be required to take financial advice if wishing to consider a transfer out of the scheme.

Whilst there are always dangers for a member to navigate, typically a financial adviser is trying to help the member make an informed decision. Indeed, the requirement that the adviser creates and evidences an informed decision is clearly set out in regulation.
To help a member make an informed decision the adviser needs to ensure they understand the benefits and options of the existing scheme, so they can compare and contrast these with alternative options available.

The DB Transfer Guide introduced the Transfer Template as a means for schemes to present advisers with detailed scheme information they require.

If this information is not provided, time will be spent by the adviser trying to obtain it. Worst of all if the adviser doesn’t fully understand the benefits of the scheme, then the financial analysis they undertake will be flawed and may mean that they undervalue the benefit potentially being given up.
In this case it would hard to say that member is truly making an informed decision.

The advisers work with a member takes time, quite often up to 8 weeks, so make it clear to the member up front the timescales and that they should engage with a financial adviser early, to avoid lengthy recalculation processes.

Step 4 – Cash flow management
Whilst a function of the scheme and not something the member will have any sight of, schemes should make sure disinvestment process are set up and managed efficiently. Whilst becoming rarer, some schemes still operate infrequent disinvestments runs, or hold very low floats, making delays for members far more likely.

Step 5 – Let the member know when their money will leave the scheme
In the period between all forms being submitted and payment of the transfer value being made to their replacement vehicle, members feel most vulnerable.
At the point you confirm that all documents have been received, set-out to the member:
·       Steps to be taken prior to paying the money from the scheme;
·       Reaffirm the CETV to be paid;
·       Confirm the receiving arrangement;
·       Estimate the date the scheme expects to make the payment, when it should then be received by the new pension vehicle.

A pension transfer involves, from a member perspective, big numbers. The decision members have to make is amongst the most important they will ever have to make, with the average transfer value in the UK being equal to or slightly higher than average property values.

As an industry, if we can make the process feel smooth, supported, ensure that decisions are informed and based on factually accurate information and data, then we will have acted to protect member’s interests. 

Following this five step framework will help us all ensure members find their safe place, and do not take risks they are not best placed to manage. I also ask the industry to embrace the principles of the Guidance and work with us to improve the document and ultimately the member experience over time. 

James Ellison, Chair of the Transfers Working Group.