Prudential scheme opens transfers to assist saving

The scheme's decision to allow other pensions to be transferred in comes as the government proposes a pot-follows-member approach to pensions consolidation. This could see members' pots automatically transferred between companies when they move to new jobs.

"The change has been introduced to give [active members] greater flexibility in managing [their] financial affairs," the scheme said in an online statement.

The £50m trust-based DC scheme has 2,201 active members and 100 deferred members, according to the NAPF Yearbook 2012.

Prudential's offer, announced in a statement to members earlier this month, is subject to the following criteria:

• Only active members of the scheme can make a request for a transfer in.
• The total cumulative fund value that can be transferred in during the period of active membership must not exceed £150,000.
• Only transfers from other registered pension schemes, excluding defined benefit arrangements, are permitted.

Jason Cannon, senior corporate pensions adviser at Lorica, said schemes increasingly had a responsibility to help their members get the best retirement outcomes and the decision was likely to be part of them fulfilling their duties.

He said: "This [help] is something that members would greatly value. The reality is very few of us work for the same organisation all our life anymore and we do tend to accrue different pots.”

The level of cost involved for a scheme looking to offer transfers would depend on how they are conducted, such as the support provided to members. A spokesperson for Prudential was unavailable to comment further on the changes.

"If there is any advice involved – because if it is advised then clearly there is going to be an element of qualified staff involved – it does cost money," Cannon said. "We know from our own analysis that it costs several hundred pounds just to break even in terms of looking at a transfer."

Prudential's choice to exclude defined benefit arrangements in its offer is likely to make the transfers in process less complicated. 

Neil Campbell, a director in Deloitte’s pensions practice, said transfers in for DC schemes are more straightforward than DB as final salary transfers included added years of service.

He added: “[Schemes] stopped doing that because that incurred risk for them. You are taking on the risk of what the future salary increase is and the liability it will increase to.”