A crackdown on final-salary transfers

The ongoing controversy over transfers out of gold-plated final-salary pension schemes is a reminder of the tough balancing act that financial regulators constantly have to manage, says David Prosser.

The ongoing controversy over transfers out of gold-plated final-salary pension schemes is a reminder of the tough balancing act that financial regulators constantly have to manage. For such watchdogs, the line is very fine between protecting consumers and ensuring that excessive red tape doesn't get in the way of their best interests.

The Financial Conduct Authority (FCA), the UK financial-services regulator, announced last week that it will require financial advisers to give much more exacting guidance on transfers out of final-salary or defined-benefit (DB) schemes. On the one hand, this move may protect savers who are misguidedly trading in their guaranteed DB pension benefits, or even being targeted by scams. On the other, the changes will cost the average saver making a transfer more than £1,600, and act as a further deterrent to the pensions industry to offer products and services in this area, even though some people need them.

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David Prosser
Business Columnist

David Prosser is a regular MoneyWeek columnist, writing on small business and entrepreneurship, as well as pensions and other forms of tax-efficient savings and investments. David has been a financial journalist for almost 30 years, specialising initially in personal finance, and then in broader business coverage. He has worked for national newspaper groups including The Financial Times, The Guardian and Observer, Express Newspapers and, most recently, The Independent, where he served for more than three years as business editor.