Workplace Pension Transfers Frozen For Three Months

Retirement savers switching money out of a defined benefit pension face a three month wait to make the transfer.

Regulators are worried that volatile stock markets and tumbling property prices make setting a transfer value challenging.

The Pensions Regulator published the new guidance on March 27.

The postponement covers transfer out of UK defined benefit pensions to the Qualifying Recognised Overseas Pension Scheme (QROPS) and inte4rnational self-invested pensions (SIPPS).

Defined benefit pensions are typically offered in the workplace by employers.

Unprecedented challenge

David Fairs, executive director of policy at TPR, said: “The significant measures and clear guidance we are announcing reflect the unprecedented and challenging situation trustees and employers find themselves in.

“The current scheme funding regime is flexible enough to cope with the impact of a severe economic downturn. However, we are actively considering what additional support and guidance we need to provide now so that those who manage and contribute to people’s savings can take the right steps to ensure adequate protection, recognising the challenging situation some scheme sponsors are in.

“We will continue to take a reasonable, pragmatic and proportionate approach in the weeks and months ahead and we call on trustees to follow the guidance closely to make well balanced decisions.”

The measure comes after some pension trustees saw an increased number of requests for transfer values, said Fairs.

The TPR guidance also allows gives permission to employers to suspend contributing to pensions ‘where absolutely necessary’ and to delay sending payment plans for catching up on the missed amounts to the regulator.

Not legally binding

However, some pension experts have explained the guidance is not legally binding and retirement savers have a statutory right to request a transfer value and to complain to an ombudsman if the process is too slow.

“As asset prices have fallen significantly, many illiquid assets are not trading readily in the current crisis and pension scheme valuations are likely to be unreliable while the present disruption prevails,” said former pensions minister Baroness Altmann.

“There have been concerns that people transferring money out of their Defined Benefit pension schemes at the moment could be damaging either the scheme’s or their own future. This sensible and pragmatic decision will help to protect scheme members who are at heightened risk of scammers while more people are at home or not working, and while the markets are in turmoil.

“Given the market volatility and violent asset price movements, nobody can be sure of the accurate value for scheme assets or liabilities.”

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