So-called experts charging expensive fees and high commission are increasingly urging people to switch from final salary schemes to the less generous defined benefit pots. The Financial Conduct Authority (FCA) has now launched 30 enforcement investigations into such transfers after reviewing advice given to members of the British Steel pension scheme.
It found appropriate advice was only given in 21 percent of the 192 cases checked. Almost half appeared to be unsuitable and 32 percent of files showed the saver had not been given enough information to make the best decision.
The FCA has already written to nearly 4,000 former scheme members advising them how to complain, as well as holding events in Port Talbot in South Wales.
Final salary pensions have become increasingly rare and have largely been replaced by defined benefit (DB) schemes, where the saver bears the risk of how much income they get in retirement.
However, since the introduction of pension freedoms in 2015 there has been a surge in the number of transfers.
Christopher Woolard, interim chief executive of the FCA said: “The proportion of customers who have been advised to transfer out of their DB pension is unacceptably high. While much of the advice we looked at was suitable, we are still finding too many cases in which transfers were not in the customer’s best interests.“
The FCA has set out a package of measures to drive up standards in the pension transfer market.