Defined Benefit Pension Transfer Advice

Guide to Abridged Advice

Abridged Advice

What is Abridged Advice?

Abridged Advice is one of the three steps in providing you with advice about transferring your defined benefit pension.

It is a high-level overview, where only limited information is considered and the outcome can only reach one of two conclusions, either that a transfer is not suitable, or we are unable to determine suitability.

Step 1 – Triage: General information about a defined benefit pension

Step 2 – Abridged Advice: Basic advice based on your circumstances

Step 3 – Full Advice: Formal recommendation to either transfer or not

As you can see, it sits in-between Triage, which is a generic overview of your options, and Full Advice, where we give you a detailed recommendation about all your transfer options.

Why Abridged Advice is useful?

We charge a fee when we give you Full Advice, whether that involves you transferring your pension or not. On the other hand, Abridged Advice is free of charge and can tell you when a transfer isn’t suitable. It therefore provides you with the earliest indication of suitability before you incur any charges.

Having been provided with the Abridged Advice conclusion, you can then decide whether you wish to receive a recommendation based upon receiving Full Advice.

What Abridged Advice includes

Abridged Advice is limited in nature.

Whilst we collect detailed information about your circumstances & objectives, along with establishing your understanding of the risks of transferring a defined benefit pension & your appetite for investment risk, we are not allowed to use this in full when carrying out our analysis.  

The limited analysis we can perform is centred around the importance your pension plays in your retirement needs (your capacity for loss) and what other provisions you have. We also consider your objectives and how losing a guaranteed income would affect them and your longer-term needs.   

The Financial Conduct Authority (FCA) regulations are very clear; we are only permitted to reach one of two conclusions:

  • Negative – this provides you with a personal recommendation not to transfer your pension and to leave it where it is, or,
  • Inconclusive – this tells you that it is unclear whether transferring your pension would benefit you. If you want to proceed, then you will need to commit to Full Advice, for which you will need to pay a fee.

What Abridged Advice does not include

We are not allowed to consider the potential destination of a transfer, which prevents us getting illustrations and carrying out a full technical analysis of your scheme and being able to compare it with a transfer. This means we are not able to establish whether your transfer value represents value for money or not.

We are also unable to make alternative recommendations such as taking scheme benefits direct, using savings etc.

The difference between Abridged Advice and Full Advice

Abridged Advice is free, and as we have already stated, it is limited in what we may consider. The outcome can only arrive at one of two possible conclusions, either a transfer is not suitable (negative), or we are unable to determine suitability (inconclusive).

Full Advice is charged for; and we are now able to consider all relevant information including the potential destination of a transfer and the ability for us to establish whether your transfer value represents value for money or not. Its conclusion is not restricted and can include alternative recommendations other than just transferring.

In other words, the fee is for the advice and not for the transfer. You must be fully aware of this before moving to Full Advice. The amount of the fee will be clearly shown in your Abridged Advice report.

How do we reach the Abridged Advice conclusion

We look at the information we have “in the round”. This means small changes in your personal circumstances such as the exact amount of money you have in savings or whether you are prepared to take a medium level of investment risk or medium/high, are unlikely to materially impact the conclusion we arrive at.  

As we have described above, the conclusion could simply be “inconclusive”.

The only time we can provide a definitive outcome at Abridged Advice stage is when it is “negative”, and it is clear transferring your pension would not be suitable.

A recommendation not to transfer is usually based on the fact it would be a demonstrably bad idea for you to do so, such as:

  • You don’t have any other assets, savings, or pensions, so the pension under review is essential for your retirement needs and you don’t have any need or reason to transfer it now.
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Frequently Asked Questions

Can I transfer my pension if I’ve only had Abridged Advice?

In short, no. The regulations laid-out by the FCA (Financial Conduct Authority) require anyone transferring a defined benefit pension to have full advice before they can proceed.  Both your old scheme and the receiving scheme will check that this has been provided.

How do i proceed if I know what I want to do?

Once you have received your Abridged Advice report, if you want to proceed to Full Advice and have no other questions, you will need to complete and return the form enclosed with that report. You will still speak to the adviser during the Full Advice process.

Equally, if you are certain that you do not want to proceed any further and do not want to discuss this with your adviser, just let us know and we will close your file.

Why is the monthly pension income figure in my abridged report different from what my scheme have said?

In line with specific FCA rules, the monthly income figure in your Abridged Advice report will be your estimated full pension at retirement age, adjusted to reflect inflation.  If your scheme has provided a different figure, this could be what the pension is worth right now (with or without an adjustment for early retirement) or projected to a future retirement age, but without considering inflation.  Either way, it is very normal for the figures to be different.

Will Full Advice come to the same conclusion as Abridged Advice?

Not necessarily. Under Full Advice the adviser can positively recommend a transfer if they believe this to be in your best interests.  They can, of course, also conclude that you should not transfer.

Either way, you will discuss our recommendations with your Grove adviser, and this will then be confirmed in writing with a detailed report explaining why they have come to this conclusion.  You can then consider what you want to do and ask any questions you like.

At what point do I become liable for a charge?

Only when we make a full formal verbal recommendation.  If you change your mind at any time up to speaking to our adviser, we can still close your file without charge.

How is the fee payable?

Most people elect to have the Full Advice fee deducted from the funds upon transfer, whether this is through a positive recommendation to transfer, or you have chosen to proceed on an Insistent Client basis.

If, of course, the transfer does not proceed then you will have to pay the fee directly to us. We will send you an invoice once we have given you Full Advice and you have had plenty of time to think.

Pension Transfer Consultation

Get Started Today

Free Pension Transfer Guide & Consultation
If you would like to find out if transferring your pension or taking a cash lump sum is suitable for you, we can provide a free initial Pension Transfer Consultation known as abridged advice.

Simply complete your details below, and we will send you our Pension Transfer Consultation Pack and Enquiry Form.

As part of the consultation we will look at:

  • What existing pension plans you have in place.
  • What your plans are for retirement.
  • Your needs for flexibility and control.
  • The likely cost of more in-depth advice.

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Defined Benefit Pension Transfer Warning

Transferring away from a defined benefit pension scheme means you will lose valuable guarantees.

Taking benefits early will almost certainly reduce your pension income in retirement and is only suitable for a limited number of people and circumstances. This should not be seen as an easy option for raising cash.

If you release all your money from your pension early you will not have anything left to provide you with income in retirement.

When releasing cash from your pension, usually up to 25% is tax free, the balance is taxed at your marginal rate at the time and could change in the future.

Watch the FCA video explaining the expectations of financial advisers when advising you on defined benefit pension transfers.

Grove Pension Solutions Ltd is authorised and regulated by the Financial Conduct Authority (Reference number 465051).