Personal PensionJun 16 2014

Standard Life: Do not ban all DB to DC transfers

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Standard Life is calling on the government not to ban all transfers from funded defined benefit to defined contribution pension schemes, warning it would “unduly constrain” options for employers.

The principle concern is that the new flexibility under DC pensions from 2015 may encourage members to transfer from DB to DC “where this is inappropriate”.

The FCA regulatory regime for advice on DB to DC transfers, however, already imposes a robust framework to ensure transfers are only recommended where this is clearly in the member’s interests.

Given this, Standard Life believes making all DB to DC transfers subject to this regime would provide “adequate safeguards against inappropriate outcomes”.

Standard Life believes there are two key reasons why a DB to DC transfer could be beneficial to employers: transfers are one of the most “cost-effective ways” for employers to de-risk their DB schemes and regulatory safeguards whereby members’ positions are protected.

Jamie Jenkins, head of workplace strategy at Standard Life, said: “It would be harmful to unduly constrain the options for private sector employers to manage their affairs in the interests of their businesses and staff unless there were very compelling arguments to ban a transfer.”

Last week, Standard Life called for all DC savers to have the right to transfer their benefits to a new scheme or provider if their current one prohibits them from accessing the new flexibility brought in by the Budget.