Many scheme members are expected to struggle to find a firm to advise them on their DB transfer options as required by law, a new report from Barnett Waddingham has found.

The report, DB to DC transfers: the current landscape, attributed the potential capacity crunch to the continued demand from DB members, as well as increased regulation and professional indemnity insurance costs.

Barnett Waddingham have stressed that sponsors and trustees must put support frameworks in place to avoid a shortage of advisers, which could in turn adversely affect trustees or scheme sponsors looking to de-risk or settle benefits.

This echoes findings from the Personal Finance Society (PFS), released earlier this month, which found that over 30 financial advice firms had stopped offering pension transfer advice in just three months, due to issues obtaining affordable professional indemnity cover.

Commenting on the report, Barnett Waddingham partner and senior corporate consultant, Simon Taylor, said: “Based on data from the PPF and the FCA, we estimate that about 200,000 [private sector DB] members are currently retiring or transferring each year and that recent levels of demand for financial advice reached about 50 per cent of this, or 100,000 members in the year to 30 September 2018.

“This shows that where advice is readily available to members who are looking at their options within their DB scheme, a significant proportion will take it.

"But with the number of advisers reducing significantly, there is every reason to believe we are approaching a serious capacity crunch."

Recent figures released by the FCA also revealed that over three-quarters of firms with DB transfer advice permission could be giving harmful advice.

Taylor added: “For sponsors and trustees, the risk of doing nothing to support members in this area is now far higher than the risk of actively doing something.

“Given the likely evolution of the member adviser market, it is difficult to see how most members will be able to do this without some support from the scheme sponsor and/or trustees.”

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