Paper proposes ban on pension transfer

Pensioners will not be able to transfer in or out of personal accounts, the DWP and the Personal Accounts Delivery Authority have proposed.

The 82-page consultation paper for personal accounts, published on the department for work and pensions' website on Tuesday, also suggested the establishment of a trustee corporation responsible for the governance and administration of the scheme.

In the paper, entitled Pensions - Consultation on Draft Scheme Order and Rules, the DWP and Pada said: "There will be a general ban on the transfer of pension funds into the scheme.

"The order makes clear that the scheme will not accept transfers into the scheme. However, individuals will be allowed to transfer pre-vested rights into the scheme."

While the Pension Schemes Act 1993 gives members of pension schemes the general right to transfer out of their scheme into another, the paper has also proposed a ban on this. This would be achieved through regulations made under the 1993 act and amended by the 2008 act, the pensions bodies said.

Rachel Vahey, head of pensions development for Aegon UK, said preventing people from transferring in or out would minimise the impact on the existing pensions market.

She said: "Where it gets a little bit more complicated is when someone actually comes to buy an annuity."

The proposed trustee corporation, comprising of between nine and 15 members, would be required to make decisions on matters that affect the scheme and its members independently of government and participating employers. The trustee would need to take into account the views of members and participating employers in the day-to-day running of the scheme and to assess whether it is meeting their needs, according to the paper.

This would be achieved in turn through the creation of both a members' and employers' panel. The launch of the document had a slight hiccup when a Pada press briefing, scheduled for Tuesday morning, was called off with less than 24 hours of notice. Pada said the briefing was cancelled due to a number of the planned speakers' commitments changing as a result of the 2009 Budget.