Pensions minister Steve Webb has warned the Government will legislate against ETVs and pension increase exchange exercises if the industry fails to raise standards in the next 12 months.
Last month, Money Marketing revealed the Department for Work and Pensions planned the set up a working group charged with delivering a new framework for incentivised transfers from defined-benefit to defined-contribution schemes.
Pension increase exchange exercises involve the member giving up future increases in their pension for a one-off uplift.
An employer undertaking an enhanced transfer value exercise will offer employees an enhancement or incentive to encourage them to switch from a DB to a DC pension scheme.
Addressing the NAPF conference in Manchester yesterday, Webb (pictured) said: “My worry is that, if we do not do something now, thousands of people will get ripped off.
“We are going to work with key industry groups including the NAPF, the CBI, the ABI and Aifa to develop a code of practice to cover incentivised transfers.
“We aim to have agreed and published interim guidance by next summer. But if we have to legislate, that is what we will do.”
Pensions Administration Standards Association chairwoman Margaret Snowdon will lead the working group.