Pension scheme trustees will be warning members about the risks of transferring out of their defined benefit scheme amid the Covid-19 crisis.
According to guidance published by the Pensions Regulator this morning (April 29), trustees will be asked to send DB members looking to move retirement funds a letter warning them of the risks during the pandemic and urging them to consider the decision carefully.
Regulators and government have issued several warnings to savers about making hasty alterations to their pensions, warning that rash decisions motivated by fear surrounding the coronavirus crisis and market crash may be exploited by scammers.
In the new guidance, TPR is calling on trustees to encourage savers to take regulated advice and highlight the free guidance provided by The Pensions Advisory Service to help them understand their retirement options.
Pension professionals are also being asked to “identify increased risks in how a member has decided to access their pension funds and give appropriate warnings of the risks and implications of their chosen option,” the watchdog stated.
Besides sending a template letter signed by TPR, the Financial Conduct Authority and the Money and Pensions Service - which runs The Pensions Advisory Service - to all DB members who request a cash equivalent transfer value, trustees are also being asked to monitor these requests and inform the FCA of unusual or concerning patterns, such as spikes or the same adviser across multitude requests.
Charles Counsell, TPR’s chief executive, said the regulator was “determined to do all we can to protect savers’ retirements from the unprecedented impact of COVID-19”.
“A decision to transfer a pension pot that’s taken a lifetime to build is a very serious one and we’d urge members to be very, very careful making any transfer decisions at this time.
“That’s why for the foreseeable future, anyone who is looking to transfer their benefits out of their DB scheme should be sent a new warning letter to make them stop and think as well as point them towards free, impartial guidance available from The Pensions Advisory Service.”
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