The Pension Regulator (TPR) has given employer schemes in receipt of defined benefit transfer instructions from members a three month hiatus. At the same time they are also allowing employers to halt contributions to employee defined benefit schemes in response to the Covid-19 crisis.
The regulator published guidance on Friday (March 27) allowing defined benefit schemes to delay member requests to transfer out of the scheme by up to three months.
This is to give trustees more time to calculate cash equivalent transfer values (CETVs) as due to falling markets caused by the coronavirus pandemic, it is now more difficult for them to be sure of the underlying value of pension funds.
Some schemes may have also experienced an increase in demand for CETV calculations which would place additional strain on administration teams.
Therefore the three month delay will allow schemes to focus on other administrative tasks such as pension payroll and retirement quotations.
Freezing defined benefit transfers should also prevent individuals being targeted by scammers or making poor financial planning decisions in response to the crisis. If you have received any communication that makes you uneasy please get in touch with us by calling 01733 314553 or by email at firstname.lastname@example.org.
Former pensions minister Ros Altmann had previously called for pension transfers to be put on hold for six months, double the amount of time the TPR has allowed for in its guidance. She said this amount of time would help “to stabilise pension schemes and allow time for a clearer picture to emerge”.
In its guidance the TPR also allowed employers and scheme trustees to put pension funding payments on hold where absolutely necessary and to delay the submission of recovery plans where such information is currently expected by the regulator.
We will be contacting any clients with transfers underway who are affected by this situation.