Defined Benefit  

Guidance sets out new norm for DB transfers

Guidance sets out new norm for DB transfers

Pension schemes and administrators should take no longer than 10 weeks to process standard defined benefit transfers, according to new guidance.

The Pensions Administration Standards Association launched a 40-page document today (July 8) which set out good practice for the industry, and included the much-awaited DB transfer template.

The guide, which won’t apply to partial transfers or overseas transactions, establishes good practices for schemes and administrators in relation to each specific part of the transfer process.

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For example, issuing a quote to a member should take no longer than seven or eight working days, while the settlement process – the time spent between receiving all the forms and paying the transfer – should only take nine working days.

The document also includes templates for letters to be sent by the schemes to the members when acknowledging a transfer request, and the DB transfer template which all parties are urged to start using.

The template was initially part of The Pensions Regulator's remit after it had responded to industry calls for a standardisation of rules in 2017.

But after working with the Financial Conduct Authority on this matter, and showing early drafts to industry players, the regulator passed on this task to PASA.

The idea of a template was to reduce the number of information requests from advisers and the time spent on facilitating the DB transfer process.

The document is broken down into two separate documents, one with scheme details to be completed by each section of the pension fund - which can be reused for future requests – and a member level detail, which will provide a full breakdown of a member’s benefits for the adviser to obtain a full understanding.

PASA’s DB transfer guidance working group is chaired by James Ellison, head of operations at financial advice firm WPS Advisory.

He suggested that the scheme level data could be set up in a data room, to which the adviser is granted access, which could create long-term time and cost efficiency for administrators.

Mr Ellison said it should take schemes and administrators between three and four weeks on average to adopt the new transfer template.

Margaret Snowdon, president of PASA, noted that the template had been "road tested", and "nobody said it will be impossible".

Guy Opperman, minister for Pensions and Financial Inclusion, noted at the launch event today that pension transfers give people flexibility when it comes to their pension pots, and they must be fast and safe.

He said: "This guidance gives the clarity needed - for both schemes and members - to ensure they’re done efficiently and transparently. It is a must-read for anyone with a stake in the pension transfer process."

David Fairs, TPR’s executive director of regulatory policy, analysis and advice, said the template "will make the process of moving pension funds more efficient, by making it easier for savers and advisers to get the details they need to make informed decisions".