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Regulator wants trustees to ‘closely’ monitor pension transfers

Defined benefit scheme trustees must monitor pension transfer activity closely and should report any concerns about financial advice to either The Pensions Regulator or the FCA.

In its annual funding statement published today, TPR says it wants to ensure DB scheme members and their advisers have all the information they need to make informed decisions in members’ best interests.

This is because some schemes are reporting high levels of transfer activity and the combination of accurate and timely information from trustees and regulated advisers is important to members.

The document says TPR wants trustees to keep records of transfer activity, including details of the advisers and the schemes to which transfers are made.

It expects trustees to monitor transfer activity closely and take advice on liquidity management.

TPR also says trustees should consider the impact of transfers on investment strategy, particularly the liability hedging arrangements, and the suitability of their transfer value basis.

Hymans Robertson partner Patrick Bloomfield says: “Trustees are being instructed to keep records of transfer activity and consider stress tests to make sure their scheme can withstand transfers out.”

He adds: “To prevent transfer values becoming a tool to massage down valuations, trustees are being told to get employers to underwrite lower than expected transfer value take-up.

“This puts a transfer out on a par with allowing for speculative investment returns, in that it can be done but employers are being forced to stand behind the outcome.”


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