The Pensions Regulator (TPR) has published guidance on what it expects from defined benefit (DB) pension scheme trustees when a member requests a transfer to defined contribution (DC) schemes.
Its guidance aims to ensure trustees have appropriate processes in place to manage transfer requests and to prompt trustees to consider the impact of transfer values as part of an approach to risk management of their scheme.
The guidance will also help trustees of DB schemes to provide clear information for members so that they can get independent advice before allowing any transfer to go ahead.
Advisers will be required to provide employees with written confirmation to allow trustees to check appropriate advice has been obtained.
DB members will be expected to meet the cost of the advice, except where the transfer is employer-instigated.
The guidance comes in the light of greater pension flexibilities offered to members of DC schemes, which could increase the surge in the number of DB members requesting a transfer of their benefits.
Its guidance is part of a consultation, which ends on 17 March.
Stephen Soper, interim chief executive at TPR, said: “The regulator believes that for most members, it is still highly likely in current conditions to be in their best financial interests to remain in their DB scheme. However members’ personal circumstances may mean they wish to consider the other options open to them.
“The provision of clear, timely information from trustees and the use of independent regulated financial advice will enable members to make informed decisions that suit their personal aims and circumstances.
“We will be working closely with the Financial Conduct Authority as the advice regime develops, and producing guidance for trustees considering member requests at all points in their journey, for example decumulation options, to ensure those decisions are also well informed.”