The Pensions Regulator (TPR) has issued guidance advising trustees to send defined benefit (DB) members, looking to move their retirement funds, a letter warning them of the risks during the pandemic, urging them to make their decisions carefully.
Since 2015, many members have taken advantaged of the flexible DB schemes offered by many businesses. However, the Covid-19 (Coronavirus) pandemic has so far caused unprecedented uncertainty for businesses that could risk heavily impacting those who make instant pension decisions.
TPR has issued guidance to help those dealing with the constant risks and outlining how trustees should be communicating this to members.
The regulator is calling on trustees to highlight free guidance, encourage members to take advice, help identify the increasing risks, send all members under the DB scheme cash equivalent transfer value a letter signed by TPR, The Financial Conduct Authority (FCA) and the Money and Pensions Service, and to also monitor CETV requests and inform FCA of unusual or concerning patterns.
TPR also urges trustees to follow the Pension Scams Industry Group code of good practice which provides practical steps for assessing transfer requests and example letters for communicating with members through this process.
Additionally, TPR says that trustees should direct its customers to the ScamSmart website to learn how to protect themselves from potential scams.
Charles Counsell, chief executive at TPR, said: “We are determined to do all we can to protect savers’ retirements from the unprecedented impact of Coronavirus.
“A decision to transfer a pension pot that’s taken a lifetime to build is a very serious one and we’d urge members to be very, very careful making any transfer decisions at this time.
“That’s why for the foreseeable future, anyone who is looking to transfer their benefits out of their DB scheme should be sent a new warning letter to make them stop and think as well as point them towards free, impartial guidance available from The Pensions Advisory Service.”
Vassos Vassou, trustee at Dalriada Trustees, added: “Most trustees already highlight the risks to members of transferring and provide details of where they can get help with advice.
“Trustees recognise the pang of anxiety associated with members requesting transfers when our own instincts are telling us the transfer may not be in their best interests.
“The additional material the regulator is asking trustees to include in the information provided to members will provide sense and balance for members before they proceed with a what could be a life-changing and potentially devastating decision.”