Pension schemes to issue Covid-19 DB transfer warning letters to members

Hannah Godfrey reports...

Pension scheme members looking to transfer from a defined benefit (DB) to a defined contribution (DC) pension during the Covid-19 crisis will be warned it is unlikely to be in their best long-term interests in a letter from regulators and schemes.

Under guidance published by The Pensions Regulator (TPR) on Wednesday 29 April, pension scheme trustees have been asked to send DB members looking to move retirement funds a letter warning them of the risks of doing so during the pandemic and urging them to consider the decision carefully.

TPR is concerned that, with Covid-19 causing market volatility and uncertainty for businesses and personal finances, pension members could be at risk of making knee-jerk decisions that could hit their pensions.

TPR chief executive Charles Counsell said: “We are 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.”