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Opra blocks pension transfers in wait for new rules

The Occupational Pensions Regulatory Authority is to allow pension trustees to stop members from transferring out of their schemes until new rules come in effect later this year which are likely to make leaving schemes less advantageous.

The move could leave some members trapped in underfunded schemes, some of which could be in danger of defaulting on pension promises, until the Department for Work and Pensions implements the new regulations which are designed to reduce transfer values.

Opra has given scheme administrators the green light to refuse to issue transfer valuations, which are vital for any transfer, until the new rules come into effect, even though the DWP cannot say when the rules will take effect.

IFAs have slammed the move, claiming that it leaves advice on transfers in limbo as couples going through divorce are unable to split pensions and people wanting to retire early cannot do so.

Advisers say the pension regulator&#39s action is heavy-handed and could be in danger of breaching the Social Security Act 1985 which requires schemes to give transfer values.

But Opra denies this claim, saying that its wide discretionary powers mean that it is not in breach of the act.

The new rules, which are still under consultation, are an interim measure to relax the interpretation of the minimum funding requirement to allow trustees to take more account of scheme underfunding.

Millfield pensions specialist Graham Duckett says: “This is a heavy-handed approach. There is no other product where you cannot get a transfer value – not even Equitable Life. Why should employees take a hit for employers&#39 underfunding when many of them took contribution holidays in the first place?”

Opra communications director Nick Edmans says: “This measure is designed to protect members who remain in the scheme where it is underfunded until the new regulations.”

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