The Pensions Regulator has urged trustees to prioritise pension switches and ensure they are completed in "good time" so savers do not miss out during the Covid-19 pandemic.
TPR has updated its guidance to remind trustees that switches between defined contribution schemes are a “core financial transaction” and a common way for savers to access their pension funds so should continue to remain a priority throughout the coronavirus crisis.
The regulator’s guidance published at the end of March explained trustees of defined benefit schemes may choose to delay new member requests for transfer quotations by up to three months.
But TPR has stressed that this is not the case for switches between DC schemes where the valuation of benefits is less complex.
David Fairs, TPR’s executive director of policy, said: “The Covid-19 pandemic has created unprecedented challenges for pension schemes and their members. That’s why we’ve been constantly reviewing and updating our guidance to support trustees and protect savers.
“Our latest guidance should help trustees of DC schemes prioritise what’s most important – such as ensuring DC to DC transfers are completed in a reasonable time, so savers don’t lose out."
The guidance cautions if a member's pension switch is delayed, and their investments fall in value in that period, then the member's cash equivalent transfer value will be reduced.
Therefore it is important for trustees to process switches within a reasonable timeframe, but they must continue to ensure they have carried out all the necessary due diligence before doing so, TPR said.
The regulator has also urged trustees to monitor all pension switching activity and remain vigilant on potential scams.
Mr Fairs said: “As well as carrying out their due diligence on transfers, trustees should help protect members by highlighting the risk from scammers in their own communications.”
Pension switching is defined as moving a defined contribution pot from one provider to the next and is different from pension transfers, which see defined benefit pensions being moved into DC schemes.
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