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Advisers criticise DWP over new CETV rules

Trustees will no longer need to provide details of why cash-equivalent transfer values have been reduced under new Department for Work and Pensions rules published this month.

Advisers say the change means that individuals wanting to transfer their pension rights out of occupational schemes have no way of knowing whether CETVs have been calculated in a fair way.

Under the old rules, trustees could reduce transfer values if there was a deficit at the last minimum funding requirement valuation. Members had the right to a copy of the MFR valuation to satisfy themselves that the reduction on transfer value had been fairly calculated.

The new rules require actuaries to get a GN11 report on the funding of the scheme but place no obligation on trustees to make that report available to members.

The DWP says nobody raised the issue in consultation and says it will look at it again.

Syndaxi Financial Planning principal Robert Reid says: “This makes it that much more difficult to raise queries if you disagree with the figure you get offered. It makes the system as opaque as with-profits.”

A DWP spokeswoman says: “There is no specific requirement to provide the GN11 report but the trustee can give a copy if they wish.”

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