Pension Transfers, Approvals and the Advice Process
Transfers
A transfer value moves benefits between arrangements. DB transfers require advice and disclosure, and the trustee must provide a statement of entitlement and a transfer value within statutory timeframes. PRSA transfers are permitted subject to provider rules. Buy-out bonds are used where schemes wind up.
Approvals
Revenue approval is required for tax-relieved arrangements. The Pensions Authority approves PRSA providers and maintains the register. Trustee approval and member consent are needed for certain transfers.
The advice process
A compliant process includes fact-find, risk profiling, suitability assessment, disclosure of charges, cooling-off, and documented rationale. For DB transfers, the adviser must assess whether the transfer is in the client's best interests, considering guaranteed benefits, scheme funding, and alternative options. Conflicts of interest must be managed and disclosed.
Traps
- Assuming a DB transfer is automatically suitable - it requires a documented best interests analysis.
- Confusing statement of entitlement with transfer value.
- Forgetting cooling-off periods.
- Overlooking insistent client procedures where advice is not followed.
Rule of thumb
If the client is giving up guaranteed DB benefits, the burden of proof sits with the adviser to document why the transfer is suitable - not with the client to justify it.