On the go: The Pensions Regulator has asked the trustees of several defined benefit schemes to contemplate cutting transfer values for workers opting out of schemes.
Letters were sent to a handful of large schemes that have experienced a high volume of transfers, a Freedom of Information request by pension provider Royal London revealed.
The regulator’s letter states: “In light of recent events concerning your scheme sponsors, we would expect you to take advice from your scheme actuary about whether the basis on which the CETV [cash equivalent transfer value] are calculated remains appropriate.”
“This would allow you to judge whether a reduction of further reduction should be applied to CETVs in light of [an] assessment of covenant strength.”
Earlier this year, an Aon survey of more than 300 UK DB schemes found that 90 per cent experienced a rise in transfer value requests from members during the preceding 18 months. Approximately 40 per cent of schemes saw a significant increase.
Steve Webb, director of policy at Royal London, said: “I would hope that well-run pension schemes would be taking expert advice when deciding how much to offer to members wishing to transfer out.”
“But the regulator’s letter is a helpful reminder to all schemes that they need to be fair not only to those transferring out but also to those left behind, especially where the scheme in question is in deficit,” he added.
