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Flexibility needed over transfers

The news that Opra is temporarily relaxing its rules to allow scheme trustees discretion over whether to provide pension transfer valuations is received with mixed blessings.

On the one hand, Money Marketing understands the motive behind such a measure – to prevent a run on transfers from poorly managed or underfunded funds – thus jeopardising the benefits of remaining members in the scheme and raising the spectre of it possibly defaulting.

On the other hand, such crude methods on behalf of Opra, leaving complete discretion to sometimes poorly advised trustees, is reminiscent of the FSA meddling in the Equitable Life debacle, where it warned policyholders to be wary of IFAs advising them to quit the troubled life office.

This left policyholders unsure of the best course of action, which in hindsight was to the detriment of many as increasing market value adjusters were systematically imposed, slashing policy values.

The truth is that only those trustees with troubled schemes are likely to make use of the new guidance leaving IFAs in a no-win situation.

They will be prevented from providing best advice to their clients in the knowledge that it is probably best for the client to transfer but blocked from doing so by the trustee.

Opra claims the move is temporary until new rules are imposed, hopefully this summer, but this leaves a worrying window within which scheme members could suffer.

There is a necessity to protect remaining scheme members but there needs to be a more flexible approach to transfers rather than a blanket ban on providing information.


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