Be on your guard against “free pension advice”

The Financial Conduct Authority (FCA) is reminding customers of the risks of transferring their defined benefit (DB) pensions to a new scheme.

In an alert at its website, the regulator lays out a series of questions consumers should consider before moving their pension pot, such as if this decision is being prompted by an unsolicited call, email or text.

Savers should also question the type of scheme their money is being transferred to, and if it is going to be invested in unusual investments such as overseas property, forestry, storage units, care homes or biofuels.

The regulator also raised a red flag on offers of so-called ‘free’ pension advice.

The FCA said: “Free pension reviews are designed to persuade you to move money saved in an existing pension pot to a new scheme. Chances are your money will be invested in something that is either very risky or a scam. Professional pension advice is not free. Professional advisers looking to act in your best interests are very unlikely to cold call you offering their services.”

The regulator warned consumers to always check if the firm providing advice is authorised, and has permission to give advice on pensions.

The watchdog reminded consumers that some of the investments being proposed through cold calling “are badly run, while others may be outright scams”.

The FCA said: “You could lose some or all of your pension pot. Even if the investment is reasonably well run, unusual investments tend to be unregulated and high risk. Returns are not guaranteed, it is generally difficult to have access to your money, and all your money is at risk.”

There are many good and valid reasons for transferring a DB scheme, ill health, significant other wealth and inheritance tax planning for example. The search for a better return and higher pension is NOT a good reason and should be avoided. For most, the guarantees of a DB scheme are extremely valuable and should not be relinquished.

We have had many enquiries here at Richmond House Wealth Management and have completed a number of transfers where special circumstances make it best advice. However, these are very much in the minority.

If you would like professional advice on your DB benefits we will be pleased to help. Our advice won’t be free or cheap, but it will be advice geared solely to what is in your best interests.

Julian Kaye Dip PFS


This information is provided strictly for general consideration only. No action must be taken or refrained from based on its contents alone. Accordingly, no responsibility can be assumed for any loss occasioned in connection with the content hereof and any such action or inaction. Professional advice is necessary for every case. The value of investments can fall as well as rise and you may not get back the full value of your investment