Just Group is planning to “disrupt” the defined benefit transfer market with launch of its new business, Hub Pension Solutions.

Since the launch of the pension freedoms in 2015, the number of DB transfers has increased significantly. A recent Freedom of Information request to the Financial Conduct Authority by the Financial Times revealed the value of DB to defined contribution transfers increased from £7.9bn in 2016 to £20.8bn in 2017. The Pensions Regulator also revealed there were around 100,000 DB transfers in 2017/18.

Just Group communications director Stephen Lowe explained that this has resulted in “massive regulatory scrutiny” from both the FCA and TPR, with pressure on schemes to do a better job that they are currently. Lowe said Hub Pensions Solutions is a “direct response” to the challenge the regulator is setting.

Hub Pension Solutions director Graeme Riddoch said the traditional method used when schemes decide they want to offer members transfer values is “clunky” and costly, as you have to pay for all the members in the scheme rather than just the ones that are interested in a DB transfer.

However, with the technology developed for Hub Pension Solutions, when a customer engages with the adviser, they will be able to use the system to pull up a record with all the scheme data, as well as all the member data pre-populated into a real time TVAS report.

“You are also only paying for the TVAS reports you run, so from a scheme perspective it could be a 50 per cent cost saving straight out the box, juts because only half the members ever talk to the adviser, and the adviser needs a TVAS.”

To compliment the system, Hub Pensions Solutions has also built a customer facing education website, which is scheme and member specific.

“When a member logs in they are going to see their estimated pension and cash at their retirement date. Then they can watch animations explaining different concepts,” Riddoch said. He noted that the videos cover the benefits of final salary schemes but also present members with the other options available to them.

He highlighted that the website is not designed to let members get the answer for themselves, as they will be advised, but educates the member about the different options available to them.

Riddoch has spent the past three years developing the technology for the new business, but said it wasn’t the potential for increased DB transfers that motivated him, but rather, he didn’t think the market was working well.

Lowe noted that Just Group was worried about some of the reputational damage that some companies were inflicting on the market, and so wanted to enter it to “disrupt it in a positive way”.

Hub Pension Solutions has worked closely with Spence & Partners, a privately owned UK firm of pension consultants, actuaries, IT specialists and administrators to develop the new business. Its director David Davison noted that the new technology will “radically speed up delivery times and reduce cost”.

Commenting on the launch of the business, Corinthian Pension Consulting managing director Robert MacGregor said: "Member help and education is a hot topic on regulators' agendas. Hub Pension Solutions has developed an engaging solution to help members understand their valuable scheme benefits and how to compare them to other options available."

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