The Pensions Administration Standards Association is publishing a code of good practice on defined benefit transfers which urges the industry to adhere to a target timescale of 10 days.
Margaret Snowdon, president of Pasa, launched a consultation on its new code, Defined Benefit Transfers: Code of Good Practice, at the industry group’s conference this morning (February 11).
It is the first time Pasa has run a consultation and follows on from its work last year looking at how to improve the DB transfer market, carried out by its DB working group, which is led jointly by the Financial Conduct Authority and The Pensions Regulator.
The code, which is voluntary, sets a target timescale for advisers and other third parties to adhere to when processing a member's transfer.
According to the code, the total maximum expected time for a DB transfer to be completed is seven to 10 days or 12 to 15 where sign-off is required.
The code also states that advisers and pension administrators must improve communications and transparency in the processing of transfers and members should be notified of any delays immediately.
Speaking at the conference, Ms Snowdon said: “The overall aim of the code is to create a balance between safety and speed.
“We believe it is important to deal with DB to DC transfers because they are often very difficult and because it’s where our reputation ends up in tatters if we get it wrong.
“When we delay a transfer it is all over the press, members think we are trying to hold onto their money, which isn’t true, advisers think that we are trying to put barriers up for them when they are trying to do their job and we think think advisers don’t know the questions to ask in the first place. It ends up as a blame game and we need to try and stop that.”
Ms Snowdon said that although the code is voluntary, she anticipates that the Pensions Ombudsman will reference it when reviewing complaint cases, as a source of what good industry practice looks like.
Ms Snowdon said: “The key message coming out from the code is communication. We want to set out clear expectations to members and other stakeholders as to what DB transfer ought to look like and importantly keeping people informed if they vary from this path.
"It is about speeding up transfers where we can and being very clear when we can’t."
In July 2019, Pasa published guidance focusing on what it defined as a standard or straightforward DB transfer.
It was originally meant to publish another piece of guidance focused on more complicated DB transfers but instead decided to create a code of good practice to cover all DB transfers and look to consult with the industry prior to finalising.
Ms Snowdon said the decision was made to transfer the guidance into a code as it "tends to carry more weight" with the industry.