The Pensions Administration Standards Association (PASA) has launched guidance on defined benefit (DB) transfers to help give members better flexibility while retaining their pension benefits.
The first of two parts, the Guide to Good Practice has three key aims: to improve overall member experience; to improve efficiency for administrators; and to improve communications and transparency.
Speaking at the launch event today (8 July), pensions and financial inclusion minister Guy Opperman said he expected DB to defined contribution (DC) transfers should take no longer than 10 weeks.
“The government will want you to go faster so 10 weeks is the largest amount of time it should take,” he noted.
He assured the industry that 10 weeks from start to finish is an acceptable amount of time for a transfer and said “the idea that [transfers are] too complicated is not acceptable on a long-term basis”.
The guidance lays out step-by-step methods and timeframes for administrators and actuaries, including for referrals and settlement processes.
Opperman also confirmed he does “not want to legislate” for this, and urged the industry to “please work together” to help avoid this.
He also stated administrators must ensure consumers are given the safeguards to protect them and ensure they know the consequences of giving up valuable DB assets when transferring.
PASA DB transfers working group chairman James Ellison, who contributed to the guidance, announced the second part of the template is expected to launch at the end of this year or early in 2020.
Future code of practice
While the guidance is not yet a code of practice, it is expected to become one in the future.
PASA president Margaret Snowdon, who sponsored the working group, commented: “There are lots of members who are right now, or could be in the future, making poor choices. It is in our ability, as industry experts, to help by coming together and working to implement this guide to good practice.”
Opperman noted the industry must not lose sight of the members when conducting these transfers, saying when we “lose the laser like focus on the consumer, we struggle”.