New guidance from The Pensions Regulator (TPR) asks trustees to warn DB members looking to move retirement funds of the risks during the pandemic and urging them to consider the decision carefully.
Since 2015, pensions freedoms have given scheme members more flexibility in how they can access their pension: many have taken advantage of this flexibility and last year £34 billion was transferred from DB schemes.
However, says the TPR, with COVID-19 causing market volatility and an uncertainty for businesses and personal finances, pension members could be at risk of making knee-jerk decisions which hit their pensions.
Charles Counsell, TPR’s Chief Executive, said: “We are determined to do all we can to protect savers’ retirements from the unprecedented impact of COVID-19.
“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.”
In the guidance, the regulator is calling on trustees to:
- highlight the free, impartial pensions guidance from Pension Wise, including phone appointments and online information;
- encourage members to take regulated advice to understand their retirement options;
- identify increased risks in how a member has decided to access their pension funds and give appropriate warnings of the risks and implications of their chosen option;
- send all DB members requesting a cash equivalent transfer value (CETV) a template letter signed by TPR, the Financial Conduct Authority (FCA) and the Money and Pensions Service, which runs TPAS;
- monitor CETV requests and inform FCA of unusual or concerning patterns, such as spikes or the same adviser across multitude of requests.
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