Defined BenefitJun 6 2018

Regulator's pension transfer template ready by summer

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Regulator's pension transfer template ready by summer

The Pensions Regulator's (TPR) pension transfer template - to be filled in by pension administrators when asked for a defined benefit (DB) transfer value – is expected to be ready by this summer.

FTAdviser reported last August that the watchdog had responded to industry calls for standard rules to help the DB transfer process, which should reduce the amount of information requests from advisers, and the time spent on this process.

A spokesperson at The Pension's Regulator said the development of the template is ongoing and that a first version should be published this summer.

The regulator is working on an "agreed list of necessary data items which financial advisers consider essential to be able to advise their clients and which scheme administrators consider deliverable", the spokesperson said previously.

FTAdviser understands that the watchdog is working with the Financial Conduct Authority (FCA) on this matter, and that an early draft has been shown to industry players recently.

The goal is to publish it as guidance for scheme trustees and pension administrators.

Since April 2015 the number of people transferring out of their defined benefit pension transfers has been soaring, as savers seek to take advantage of sky-high transfer values and to move their nest eggs into defined contribution (DC) schemes in order to access them using pension freedoms.

According to figures from the Office for National Statistics (ONS), funds transferred out of pension schemes almost tripled to a record £34.2bn in 2017.

The work on the defined benefit transfer template started with a roundtable last July, at which the regulator heard the views of financial advisers, providers, and scheme administrators on DB transfers information requests.

Sir Steve Webb, director of policy at Royal London, flagged up this issue with The Pension's Regulator , after being contacted by Neil Adams, pension and investment specialist at financial advice firm Drewberry.

Mr Adams said it was quite frustrating trying to get information from the scheme administrators to allow advisers to give the right advice to clients.

Sir Steve said: "With schemes having handled around 100,000 transfers last year, streamlining the process would benefit members, advisers and schemes. One regular source of frustration is the poor quality of information supplied alongside [cash equivalent transfer value] CETV quotes. 

"The fact that The Pension's Regulator is working on a template which schemes would be encouraged to use is a step in the right direction.”

Sir Steve has "no doubt that DB schemes are asked for the same information over and over again, so it must make sense for them to supply standard information via a template which would help advisers to do their jobs and would ensure that deadlines are not missed". 

He added: "I hope that The Pension's Regulator will move swiftly to publish the final version of their template so that schemes can start to implement it."

Steve Carlson, chartered financial planner at Cardiff-based Carlson Wealth Management, argued that the market definitely needs a defined benefit transfer template.

He said: "The amount of time wasted by advisers and pension administrators dealing with information requests and the delays it causes is ridiculous considering every adviser needs to find out the same information."

He also added that the template should include "all the information the FCA stipulate is needed to give the right advice".