Aegon has written to the Department for Work and Pensions to iron out irregularities it says have arisen due to the pension reforms and the FCA’s new rules on transfers from schemes with “safeguarded benefits”.
This month, the regulator published a consultation on tighter standards on pension transfers, including the requirement for advisers working on transfers from defined benefit schemes to have the pension transfer specialist qualification.
Members of schemes with guaranteed annuity rates will also need to take advice before transferring, but the transfer qualification will not be required. These types of pensions have been dubbed safeguarded benefits.
Aegon regulatory strategy director Steven Cameron says the new definition has made it less clear how funds such as with-profits funds should be treated in relation to the 0.75 per cent charge cap.
In addition, Cameron says the extension of mandated advice to guaranteed annuity rates could cause problems in schemes where trustees have bought contracts with guarantees.
He says: “If it’s a GAR, there’s no pension specialist requirement. Where things get less clear is if an occupational scheme has a GAR. The DWP says if this is offered by the actual scheme, then it’s a safeguarded benefit.
“But if the trustees have bought insurance contracts with GARs and the member simply gets what the insurance policy is worth, then it is money purchase and not a safeguarded benefit. So in the former case, advice is required but in the latter it’s not.”