The Pensions Regulator has warned it may use its anti-avoidance powers on trustees who allow or encourage dodgy transfer incentive exercises.
Speaking at the National Association of Pension Funds annual trustee conference, chairman David Norgrove warned trustees to presume transfer sweeteners are not in members’ interests.
He said: “If a company is willing to encourage the transfer, the company’s gain is likely to be the member’s loss.”
Norgrove said TPR has been tipped off about worrying tactics designed to encourage members to transfer.
These include employers offering to pay for advice as long as members take that advice, members being told the future of the scheme is more uncertain than it is therefore suggesting it is in the interest of the member to transfer out and members being put under excessive pressure to make a decision quickly by being told there is not enough money to go around.
Norgrove cited FSA guidelines, which stress to firms that it is extremely difficult to make a direct offer financial promotion for a defined benefit transfer that is fair, clear and not misleading.
He said: “Trustees should also start from the presumption that such exercises and transfers are not in members’ interests.Many members are likely to be strongly influenced by the immediate prospect of receiving an attractive amount of cash.Where behaviours are particularly concerning, we may look to use our