First Actuarial said the consultation exercise proposal to exclude employers from the process of calculating transfer values is inconsistent with the overall policy of getting trustees and employers to work more closely together.
First Actuarial director Alan Smith says: “We are disappointed that the draft regulations do not give the employer any say in the minimum level of transfer values. As they stand, the regulations are completely at odds with the new Scheme Funding Regime which requires trustees and sponsoring employers to work together.”
Another inconsistency is that the draft regulations would require the sponsoring employer to be involved if transfer values above the minimum level are to be paid, even though the employer will not have been involved in the setting of the minimum values themselves.
First Actuarial is also concerned that the draft regulations do not require a consistent approach to be followed between transfers in to and out of a scheme. Without a consistent approach there is a risk that members who bring a transfer value into a scheme but wish to transfer out later may not receive a fair deal.
Having a Government “expectation” that schemes should bring any such differences to the attention of anyone wanting to transfer into the scheme is a very weak form of consumer protection.
First Actuarial believes the current requirement for consistency should be maintained.
Smith says: “We support the scheme specific approach to calculating transfer values but feel it is important to iron out these inconsistencies. This could be done quite easily by requiring trustees to consult with the employer before setting the assumptions to be used to calculate minimum transfer values.
“If the Government will not go this far then it should at least encapsulate in legislation (or a Code of Practice) the requirement to bring differences to the attention of the person wanting to transfer into the scheme. It is highly unsatisfactory for Government expectations on such an important matter to be left to comments in a consultation paper.”