DB Scheme

Question 1

6 Benefits of transferring to a FAD

Answer 1

• access before age 65
• can choose level of income/withdrawals to suit his needs
• possibly higher level of PCLS
• death benefits before 75 are tax free
• eventual benefits can be passed to children
• if he transfers whilst in good health then it will be free of IHT
• transfer values are high at the moment

Question 2

6 drawbacks of transferring DB to FAD

Answer 2

• loss of indexation
• loss of secure lifetime income
• if scheme is underfunded then TV may be reduced
• he will take on Investment risk
• and longevity risk
• costs/charges

Question 3

Impact if DB scheme enters the PPF

Answer 3

-

Question 4

FCA requirements for an adviser preparing an APTA

Answer 4

• rates of return must reflect investment choice of transferring funds
• use the assumptions set out in COBS when producing illustrations
• take account of impact of transfer on clients tax position
• and on state benefits
• must consider likely pattern of benefits taken from ceding scheme and proposed plan
• plan for life expectancy longer than average
• consider how each scheme meets the clients income needs
• and death benefit needs
• consider the trade off when considering different client objectives
• take account of all charges
• must include a transfer value comparison