National company ETV achieves 25% take-up

It has carried out the exercise to standards it believes will meet the guidelines of a forthcoming report from the Department for Work and Pensions (DWP), including offering free one-to-one advice and no cash enducements.

The national company cannot be named until it has reported the information to its shareholders.

The scheme, which has recently switched to CPI from RPI, also offered benefits slightly above RPI-linked rewards.

John Reeve, head of consulting at Premier Pensions, worked closely on the exercise, which achieved a 25% take-up – representing 30% of all deferred members – in an area where 10%-15% is considered good.

He said: “This client wanted to give staff an opportunity to transfer if they wanted to. This scheme benefited from the move to CPI, so the thinking was, ‘we have benefited from that, is there a way we can give some of that back to our members?’”

The exercise has proved most popular with the youngest and oldest members.

Reeve reasoned young members with small pension pots would have been advised that a chunk of benefits valued in highly priced gilts transferred into equities should be able to outperform by the time they reach retirement.

For older members with large accrual, the opportunity to move to annuities without spouse benefits or without inflation linking gave many the opportunity for a higher pension.

Reeve also warned any onerous legislation from the Financial Services Authority (FSA) or the DWP will end such exercises in future, despite such benefits to members.

The FSA consultation has called for annuities to be calculated on a gender-equal mortality rate, for CPI-linked benefits to be valued using RPI and for members to be offered advice paid for by the employer.

It intends for the rules to create a standard offering across the industry.