Home

  • CII Exams
    • AF Exams
    • CII AF1 Personal Tax and Trust Planning
    • CII AF4 Investment Planning
    • CII AF5 Financial Planning Process
    • CII AF7 Pension Transfers
    • CF Exams
    • CII CF1 UK Financial Services, Regulation and Ethics
    • CII CF6 Mortgage Advice
    • CII CF8 Long Term Care Insurance
    • ER Exams
    • CII ER1 Equity Release
    • FA Exams
    • CII FA1 Life Office Administration
    • CII FA2 Pensions Administration
    • IF Exams
    • CII IF1 Insurance Legal and Regulatory
    • CII IF2 General Insurance Business
    • CII IF3 Insurance Underwriting Process
    • CII IF4 Insurance Claims Handling Process
    • CII IF5 Motor Insurance Products
    • J0 Exams
    • CII J02 Trusts
    • CII J05 Pension Income Options
    • CII J07 Supervision in a Regulated Environment
    • CII J10 Discretionary Investment Management
    • CII J12 Securities Advice and Dealing
    • LP Exams
    • CII LP2 Financial Services Products and Solutions
    • R0 Exams
    • CII R01 Financial Services, Regulation and Ethics
    • CII R02 Investment Principles and Risk
    • CII R03 Personal Taxation
    • CII R04 Pensions and Retirement Planning
    • CII R05 Financial Protection
    • CII R06 Financial Planning Practice
    • CII R07 Advanced Mortgage Advice
  • CII Qualifications
    • CII Qualifications Overview
    • Advanced Diplomas
    • CII Advanced Diploma in Financial Planning
    • Awards
    • CII Award in Financial Administration
    • CII Award in Life and Pensions Foundations
    • CII Award in Long Term Care Insurance
    • CII Award in Regulated Pension Transfer Advice
    • Certificates
    • CII Certificate in Advanced Mortgage Advice
    • CII Certificate in Discretionary Investment Management
    • CII Certificate in Equity Release
    • CII Certificate in Financial Services
    • CII Certificate in Insurance
    • CII Certificate in Investment Operations
    • CII Certificate in Mortgage Advice
    • CII Certificate in Paraplanning
    • CII Certificate in Regulated Financial Services Operations
    • CII Certificate in Securities Advice and Dealing
    • Diplomas
    • CII Diploma in Financial Planning
    • CII Diploma in Regulated Financial Planning
  • Main Pages
  • Home
  • Blog
  • Corporate
  • FAQ
  • About
  • Contact
  • Home
  • Blog
  • Corporate
  • FAQs
  • About
  • Contact
Cart
Brand Financial Training
  • CII Exams
    • Exam-Col-01
      • AF Exams
      • CII AF1 Personal Tax and Trust Planning
      • CII AF4 Investment Planning
      • CII AF5 Financial Planning Process
      • CII AF7 Pension Transfers
      • CF Exams
      • CII CF1 UK Financial Services, Regulation and Ethics
      • CII CF6 Mortgage Advice
      • CII CF8 Long Term Care Insurance
      • ER Exams
      • CII ER1 Equity Release
      • FA Exams
      • CII FA1 Life Office Administration
      • CII FA2 Pensions Administration
    • Exam-Col-02
      • IF Exams
      • CII IF1 Insurance Legal and Regulatory
      • CII IF2 General Insurance Business
      • CII IF3 Insurance Underwriting Process
      • CII IF4 Insurance Claims Handling Process
      • CII IF5 Motor Insurance Products
      • J0 Exams
      • CII J02 Trusts
      • CII J05 Pension Income Options
      • CII J07 Supervision in a Regulated Environment
      • CII J10 Discretionary Investment Management
      • CII J12 Securities Advice and Dealing
      • LP Exams
      • CII LP2 Financial Services Products and Solutions
    • Exam-Col-03
      • R0 Exams
      • CII R01 Financial Services, Regulation and Ethics
      • CII R02 Investment Principles and Risk
      • CII R03 Personal Taxation
      • CII R04 Pensions and Retirement Planning
      • CII R05 Financial Protection
      • CII R06 Financial Planning Practice
      • CII R07 Advanced Mortgage Advice
      • Study Kit Box
  • CII Qualifications
    • Qual-Col-01
      • CII Qualifications Overview
      • CII Advanced Diploma in Financial Planning
      • CII Award in Financial Administration
      • CII Award in Life and Pensions Foundations
      • CII Award in Long Term Care Insurance
      • CII Award in Regulated Pension Transfer Advice
    • Qual-Col-02
      • CII Certificate in Advanced Mortgage Advice
      • CII Certificate in Discretionary Investment Management
      • CII Certificate in Equity Release
      • CII Certificate in Financial Services
      • CII Certificate in Insurance
      • CII Certificate in Investment Operations
      • CII Certificate in Mortgage Advice
      • CII Certificate in Paraplanning
      • CII Certificate in Regulated Financial Services Operations
      • CII Certificate in Securities Advice and Dealing
    • Qual-Col-03
      • CII Diploma in Financial Planning
      • CII Diploma in Regulated Financial Planning
Brand Financial Training > AF3 > Sitting on the Fence and Getting the Best of Both Worlds
  • Previous
  • Next
Sitting on the Fence and Getting the Best of Both Worlds
April 26, 2016
Sitting on the Fence and Getting the Best of Both Worlds

Sitting on the Fence and Getting the Best of Both Worlds

Posted by The Team at Brand Financial Training on April 26, 2016 in AF3, FA2, financial advisers, J05, Pensions, R04, R08
Last updated on January 20th, 2020 at 6:01 am
Sitting on the Fence and Getting the Best of Both Worlds

This article discusses defined benefit scheme pension splitting as a flexible option for pension savers – of interest to those studying for any of the CII pensions examinations, for example: R04, R08, AF3, FA2 or J05.

Written by Mark Underdown

As financial advice is heavily reliant on the future, making a recommendation is usually a process of carefully weighing the specific (and potential) advantages and disadvantages, before reaching a decision on the best course a client should take with their finances.

On many occasions however, I often find that the decision isn’t so clear-cut; there are just too many variables and conflicting benefits and disadvantages to make a strong recommendation either way.

This isn’t so much of a problem for firms that rely on moving assets for their compensation (dare I say it, but the advice is likely to be nudged, or sometimes shoved, in the direction of moving the funds elsewhere).

When you charge an explicit fee for entirely unbiased advice however, it can sometimes create a dilemma. Just what should the recommendation be?

My own experiences of this problem have often been related to defined benefit schemes.

With the future outcome dependent upon so many variables and assumptions, and with the two main opposing options (investing funds with drawdown vs. contractually agreed scheme benefits) being so entirely different in structure, risk and flexibility, it’s left me wishing we could sit on the fence.

In light of the recent pension freedoms and the forthcoming second hand annuity market, may I suggest we consider another flexibility for pension savers?

Defined Benefit Scheme Pension Splitting

Basically, why should people have to make the outright decision between keeping their scheme benefits and moving to a defined contribution pension fund?

The decision is fraught with dangers and even with the most thorough advice, the outcome is simply far too uncertain to confidently make a recommendation one way or the other.

Reading about Defined Benefit Scheme Pension Splitting as a flexible option for pension savers. Share on X

 

Why can’t clients get the best of both worlds?

Let’s say a person has a defined benefit scheme that offers a CETV of £500,000.

Perhaps schemes could offer a part CETV of £250,000, allowing the scheme member to obtain the flexibility, access and possible generational planning opportunities which come with the newer flexible pension structures, but critically, they maintain an element of pension income security for their retirement.

This could be especially useful for those who have larger defined benefit schemes. You could keep the DB scheme up to the income level that is protected by the Pension Protection Fund in the event of employer insolvency (providing a dual layer of contractual security), but move the residual funds to a more flexible alternative with investment into financial markets.

Prudent Advice

With defined benefit scheme advice currently being avoided like the plague in many advisory firms, perhaps allowing advisers to sit on the fence with our advice will help encourage further advice in this sector and lead to better client outcomes.

We are all schooled on the benefits of diversification. With many of our clients having a considerable amount of their retirement income linked to one contract and one employer, being able to split the contract and move part of it to an alternative source and format for providing retirement income could prove to be very prudent advice.

Grab the resources you need!

If you’re studying for your CII R04 exam, and you’re somewhat anxious, grab our free taster to try out one of Brand Financial Training’s resources for yourself.  Click the link to download the R04 mock paper taster now!

Click here to download our free taster mock paper for CII R04

Over to You…

What do you think about this as another way of offering flexibility to pension savers? Let us know in the comments!

 

Mark Underdown is The Nomad Paraplanner.  He works remotely and can assist with investment research and financial planning reports. Visit www.nomadparaplanner.com to find out more.

Tags:defined benefit scheme, flexibility for pension savers, pension splitting

Related posts

  • Brand Bitesize: Defined Benefit Commutation Factor
    Brand Bitesize: Defined Benefit Commutation Factor
  • How to Work Out the Maximum Amount of PCLS Available
    How to Work Out the Maximum Amount of PCLS Available
  • Looking at Pension Input Periods and Defined Benefit Schemes
    Looking at Pension Input Periods and Defined Benefit Schemes

Subscribe

Get new blog posts delivered straight to your inbox!

By ticking this box you are giving your consent for us to email you when a new post is published on our blog. We may also email you with additional information and offers that we believe may be of interest to you. We take your privacy very seriously and we will never share your personal information. You can unsubscribe from our emails at any time. For information about how we handle your data, please read our privacy notice.

Please tick the box to give your consent for us to email you when a new post is published on our blog. We may also email you with additional information and offers that we believe may be of interest to you. We take your privacy very seriously and we will never share your personal information. You can unsubscribe from our emails at any time. For information about how we handle your data, please read our privacy notice at https://brandft.co.uk/privacy-policy/

Search

To search our blog just enter a keyword and click search.

Latest Posts

  • Friday Five Focus on Investments – 5 Questions in 5 Minutes – 20 Jun 2025
    By The Team at Brand Financial Training
    June 20, 2025
  • Our Post-Exam Review of the April 2025 CII R06 Exam
    By The Team at Brand Financial Training
    June 17, 2025
  • Friday Five Focus on Regulation – 5 Questions in 5 Minutes – 13 Jun 2025
    By The Team at Brand Financial Training
    June 13, 2025
  • Newsletter for June 2025
    By The Team at Brand Financial Training
    June 10, 2025

Follow us

Categories

Archives


All content © Brand Financial Training Ltd, 2008-2024. Unauthorised use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited.

Excerpts and links may be used, provided that full and clear credit is given to Brand Financial Training Ltd https://brandft.co.uk with appropriate and specific direction to the original content.

Contacts

Email :
Tel : +44 (0)345 680 1682
You can leave a voicemail for us but for the quickest response, please email our customer service team at the above email address, who will respond within 24 hours.

Calls are charged at the same rate as standard landline numbers. This rate will depend on your telephone provider and may be included in your tariff.

Newsletter

Stay up to date with our informative monthly newsletter tailored for you.

Learn more

We write for...

Logo: Money Marketing Logo: Professional Paraplanner Professional Paraplanner Awards 2021
Learn more

We support...

In Aid of Trussell Trust In Aid of Refuge Together we will end homelessness
UNICEF UK Ukraine Appeal, Save the Children Gaza Appeal
Find out more about how we work to make a social impact.
Learn more

Home
About
Blog
Contact
Social Impact

Money back guarantee
Corporate
Help and FAQs
Learning Resource Updates

Email :
Tel : +44 (0)345 680 1682 (Voicemail only)

Calls are charged at the same rate as standard landline numbers. This rate will depend on your telephone provider and may be included in your tariff.

LinkedInLinkedInTwitter/XTwitter/X YouTubeYouTubeYouTubeYouTube

©2025 Brand Financial Training Ltd · Reg No: 7153959 · VAT No: 979 2499 45

Policies | Terms of use | Terms of sale | Privacy policy | Cookie policy