The Pensions Regulator urges trustees to prioritise pension switches between Defined Contribution schemes
14 May 2020
The Pensions Regulator (TPR) has advised trustees to prioritise pension switches to ensure that they are completed with sufficient time so that savers aren’t penalised during the COVID-19 pandemic.
In updated guidance, TPR reiterated to trustees how switches between Defined Contribution (DC) schemes are a “core financial transaction” and frequently used by savers to access their pension funds so they must remain a priority despite the outbreak of coronavirus.
Previously published guidance detailed how trustees of Defined Benefit (DB) schemes may opt to delay new member requests for transfer quotations by up to a maximum of three months, but TPR has confirmed that this isn’t the case for switches between DC schemes as the valuation of benefits is far less complicated.
It is important for trustees to process switches as soon as possible, because if member’s pension switches are delayed, and their investments fall in value during that crucial period, then the member’s cash equivalent transfer value will be lower. Trustees must still ensure that they carry out the required due diligence prior to any switches.
TPR also reminds trustees that they should be monitoring all pension switching activity and remain particularly alert and wary of potential scams, as fraudulent activity has increased significantly throughout the COVID-19 crisis.
TPR’s executive director of policy, David Fairs, 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."
he information in this article is accurate at the time of publication. For all the latest information, news and resources on how the COVID-19 pandemic is affecting payroll professions, visit our Coronavirus hub.