Official pension bodies admit gaping hole in transfer data

Official pension bodies admit gaping hole in transfer data

The Pension Protection Fund (PPF) has admitted that there is a hole in the data it receives from the regulator, which means neither body has up to date figures on defined benefit (DB) transfers.

According to the PPF Purple Book 2017 released today (5 December), the number of deferred members in DB schemes - past members who have not yet reached retirement and who have the option of transferring out - has remained at 47 per cent since 2016.

The number of pensioners in receipt of a retirement income also stayed the same at 40 per cent, while there was a very small reduction of active members - those still contributing - from 13 per cent to 12 per cent.

The static figures are at odds with others which suggest a dramatic rise in the number of people who have sought to transfer out since pension freedoms rules were introduced in April 2015.

These rule changes gave many more people the option to take their nest eggs as a lump sum, but only if they were in a defined contribution scheme.

As people in DB schemes also sought to benefit from the changes, DB pension transfers have been soaring, with savers seeking to take advantage of sky-high transfer values.

Such a movement would be translated in a reduction of the number of deferred members in the PPF data, which are the ones who can transfer out their pension pots.

The PPF itself recognised in the report that “recent studies suggest that both the number of requests for transfer value quotations, and subsequent transfers, have been increasing, particularly in the year 2016/17”.

But it admitted that: “While this has not had a discernible effect on the proportions of active or deferred membership shown in the Purple Book 2017 dataset, we’d note that due to a lag in the effective date of the membership count in the data we receive, our membership data is unlikely to capture everything that’s happened since 2015.

“Any subsequent trends in member transfers will be captured in future Purple Books.”

The majority of the data of this report is based on information that eligible DB schemes are obliged to provide to The Pensions Regulator (TPR), and cover the 12 months from 1 April 2016 to 31 March 2017.

Nevertheless, according to a PPF spokesperson, the Purple Book is not focused on DB transfers.

He said: "The Purple Book tracks the risks faced by DB pension schemes in the UK. It helps us understand the universe of schemes we protect and feeds into our modelling to help us understand the claims we might face.

"This focus means that it is not intended to track all of the current themes that touch on the sector.”

The regulator itself has, however, admitted a lack in up-to-date figures on this matter.

In May, TPR revealed that 67,700 people transferred out of DB pension schemes in 2016.

However, the regulator estimated, at the time, that the number could be as high as 80,000 as not every scheme reported how many transfers they carried out.