A “collective delusion” is causing the financial planning sector to believe it could comfortably adapt from defined benefit (DB) to defined contribution (DC) schemes, according to Lucian Camp.
Following the introduction of pension freedom two years ago and multiple signs DB schemes would continue to muddle along over the coming years, more savers have been transferring away from final salary schemes and into DC pensions.
Camp (pictured above, third from right) said savers moving from DB to DC schemes lack the infrastructure to take a more hands-on role and manage the change effectively. Momentum UK head of retail sales Andy Davies echoed Camp’s comments and said pensions had “moved from the golden age of DB to the terrfiying world of DC”.
The change has not been simple for advisers either – the Financial Conduct Authority (FCA) has previously warned advisers against executing DB transfers without considering where the relocated assets will be invested. The warning followed rising compensation claims as a result of DB transfers into risky, unregulated self-invested personal pension schemes.
‘Become the infrastructure’
Momentum UK managing director Samantha Seaton added: “Financial advisers can become the infrastructure, which is currently lacking, and while there are big challenges ahead this also presents a great opportunity.
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