Almost half, 47 per cent, of advisers have seen a rise in insistent clients disagreeing with their defined benefit transfer recommendations, Momentum Pensions has revealed.

According to research from Momentum Pensions, nearly two out of three, 63 per cent, of advisers noted that their greatest concern about their DB business is the risk of future liabilities from advice that is contested.

Of the 102 advisers specialising in pensions planning in the study, 53 per cent said that their biggest fear for clients who transfer is that they are surrendering a guaranteed income for life. A further 48 per cent said they worry that customers don’t understand the investment risks of moving into defined contribution pension plans.

The research, which was conducted by PollRight in September 2017, also found that 58 per cent of advisers would support legislation to specify the investment vehicles DB funds are transferred into including capital protection and hedges against inflation and volatility.

The Financial Conduct Authority recently highlighted that half of the DB transfer cases it had reviewed were rated as suitable. Momentum speculated that the FCA focus on transfers means that ‘one size fits all’ methods are no longer effective.

With this, 48 per cent of advisers voiced concerns about the disconnect between the FCA and The Pensions Regulator on best practice regarding DB transfers, while 42 per cent are concerned about a rise in the cost of professional indemnity insurance from more transfers.

Nonetheless, advisers are aware of the fact that the rise in DB transfer business over the last two years has been a significant source of business. Sixty per cent stated that they were concerned about the potential impact if interest in these transfers lessen.

Momentum Pensions head of sales John McCreadie said: “There is clearly strong demand for DB transfers…It is a real issue for advisers faced by clients who are insistent on moving to benefit from relatively high transfer values and the perceived increased flexibility of SIPPs and DC schemes.

“DB schemes pensions offer valuable benefits and anyone transferring should be looking for choice and value from their investment selection as well as full flexibility and a range of ways of accessing the solution.”

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