The Chartered Insurance Institute (CII) is pushing ahead with the launch of a new pension transfer qualification in light of the regulator’s recent consultation on defined benefit (DB) transfers.
The professional body originally announced the launch of the new qualification in November, which is intended to support advisers who want to provide specialist advice on DB transfers.
As the exam unit had been developed prior to the new regulatory proposals, which are not yet in force, the CII said it would work with the Financial Conduct Authority (FCA) to ensure the qualification supported any implemented regulation.
The current ‘Level 4 Certificate in Pension Transfer Advice’ will now include a new Level 6 unit (AF7) in pension transfers. It will open for enrolments in August 2017.
The Level 4 Certificate also includes three existing CII Level 4 units – R01 ‘Financial services, regulation and ethics’; R02 ‘Investment principles and risk’; and R04 ‘Pensions and retirement planning’.
CII managing director of engagement and chief executive of the Personal Finance Society Keith Richards (pictured) said: “The transfer of safeguarded benefits is an increasingly complex area, and so, in the interests of consumers and the advice profession, we support the FCA’s renewed focus on the qualifications, experience and continuing professional development requirements for pension transfer specialists.”
He added: “We are committed to delivering the in-depth knowledge and practical skills required by those seeking to advise on pension transfers, which is an increasingly important part of the advice process following the government’s pension reforms.
“Our new dedicated pension transfer exam unit is client focused, and has been developed in the spirit of the FCA’s current consultation, which we will formally respond to.”
Retirement income planning
The CII also confirmed its plans to introduce a new Level 6 advanced diploma unit AF8 ‘Retirement income planning’ – in October 2017, which would cover aspects of pension planning not covered in AF7.
It said this would include topics such as the tax treatment and legal framework for pensions, features and risks of defined contribution and DB schemes, state retirement benefits, and the different needs and solutions available to personal and corporate clients.
Together, the two new units will replace the current AF3, which will be withdrawn in April 2018.
The CII added that 7,000 CII SPS holders are qualified to provide pension transfer advice, holding either the body’s withdrawn unit G60 ‘Pensions’ or current unit AF3 ‘Pension planning’.
Advisers who hold the CII diploma in financial planning, but not G60 or AF3, will just need to complete AF7 to become qualified pension transfer specialists. AF7 involves 50 fewer learning hours than AF3.
Transfer regulation
In its DB transfer consultation, the FCA proposed replacing the current starting assumption that a DB transfer would be unsuitable. The regulator also proposed DB transfer advice must be based on a personal recommendation, outlining additional factors for advisers to consider.
In its Retirement Outcomes Review, meanwhile, the regulator also found more than half (53%) of pension pots accessed under pension freedom had been fully withdrawn, while one-third (30%) of consumers entered into drawdown without obtaining guidance. This compared with 5% doing so before the introduction of pension freedom.
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