Final guidance published on transfers from DB to DC schemes

15 April 2015

The Pensions Regulator has published its final guidance to assist trustees and managers of defined benefit (DB) pension schemes to manage member requests for transfers into defined contribution (DC) schemes and conversion of benefits within the same scheme.

The greater flexibility offered to members of DC schemes from 6 April to access their pension savings has the potential to increase the number of members requesting a transfer of their benefits.

Where members are converting to DC benefits within a scheme there is no obligation for trustees to provide the new decumulation options permitted after 6 April 2015.

The final guidance aims to:

  • explain the new requirement for trustees to check that members have obtained appropriate independent advice before transferring or converting ‘safeguarded benefits’ (such as DB benefits) to DC benefits
  • help trustees ensure they have appropriate processes in place to manage transfer requests
  • prompt trustees to consider the impact of transfer values as part of an integrated approach to risk management of their scheme
  • require trustees to provide clear information for members so that they can get independent advice on the best option for them

The regulator has also published its response to feedback received during its consultation on the guidance. The regulator received 53 responses from representative and professional bodies, employers, trustees, advisers and individuals. Generally, respondents welcomed the guidance as a basis to prepare for the reforms and to understand the new financial advice requirements where a member’s safeguarded benefits have a cash equivalent transfer value of above £30,000.

The regulator intends to review its guidance on transfers in 2016 in light of experience.

To view the guidance and consultation response go to DB to DC transfers and conversions.