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APTA and the Pension Transfer Analysis Report


There has been some confusion over the make-up of an Appropriate Pension Transfer Analysis (APTA) and its relationship with the pension transfer analysis report. This brief commentary should help to provide clarity on what is still a bone of contention for many advisers almost 6 months since its inception.


In June 2017 the FCA launched the Consultation Paper CP17/16** with the intention to connect with pension transfer specialists and ultimately revamp the overall advice process offered to those with safeguarded benefits. Within this paper the FCA cited that "Since the introduction of the pension freedoms in April 2015, consumers have more options available to access their pension savings. This has combined with more recent changes to the financial environment leading to historically high levels of transfer values" (CP17/16**, Page 3, Chapter 1.3). With this statement alone, it is clear that the FCA were taking the first steps in an attempt to revolutionise the way occupational financial advice was devised and delivered.

Upon reading this paper further the extent of the FCA's proposed changes were clear and of particular interest to ourselves at O&M was the proposal to introduce a new concept known as the Appropriate Pension Transfer Analysis (APTA). The FCA asserted that "Advisers often focus - in some cases exclusively - on the TVA element rather than making a rounded assessment of suitability based on all relevant factors" (CP17/16**, Page 15, Chapter 4.5). Therefore, it was suggested that a more robust approach was required to ensure that those with safeguarded benefits received a more tailored holistic advice package - enter stage right the APTA. 


After receiving feedback from those involved in pension transfers the FCA produced the final rules and guidance paper - Advising on Pension Transfers PS18/6 - in March 2018. This paper provided a road map detailing the pending changes to the way occupational pension advice is constructed with the changes coming into effect from the 1st of October 2018. Arguably, it seemed logical that the changes to be implemented would indeed have the desired effect, which was to ensure all those with safeguarded benefits would receive thorough bespoke advice. There was one change however which signalled a dramatic shift in the way benefits were evaluated - the introduction of the Transfer Value Comparator (TVC).


In the FCA's words "...a mandatory Transfer Value Comparator (TVC) should be included within the APTA. This would replace the existing Transfer Value Analysis (TVA) approach, which focuses on the 'critical yield' needed to match a guaranteed income." (PS18/6, Page 16, Chapter 3.11). This represented a considerable change in the way safeguarded benefits were compared to more flexible options. More information about the TVC can be found within our Knowledge Base article which you can view by clicking HERE


This is where the confusion still lies within the pension transfer arena! The FCA have simply provided guidance as to their expectations of an APTA without being overly prescriptive. This is leaving some advisers concerned that they are not producing specialist pension transfer advice in line with the new requirements. Furthermore, especially in the early days post October 1st 2018, we were receiving regular enquiries for 'APTA', 'TVC' and 'TVAS' reports with clear confusion as to the content that they would receive from our Transvas Profiler software and Transfer Bureau service. Queries such as "Would a Critical Yield still be included in the APTA report?" and "Do you produce the new APTA reports? " were asked of us on a daily basis. 


To help alleviate the confusion and to provide clarity on this matter we have produced our own Knowledge Base article entitled "APTA and the O&M Pension Transfer Analysis Report" - click HERE to download a copy. Within this article you will find our own interpretation of what should be included within the APTA. We also confirm that we still include the Critical Yield figures on our pension transfer analysis reports in addition to the mandatory TVC. 

In conjunction with our TVC article referenced above you should have all that you need to make sense of the new world!  

We have plans to introduce new products to enhance your APTA content which we are working on at the present time. 

More to be revealed soon!