The UK Pensions Administration Standards Association (PASA) has unveiled a consultation on its defined benefit (DB) transfers code of good practice.
The industry body is looking to hear from the sector about what should be ‘best practice’ when it comes to DB pension transfers.
The PASA acknowledged that, at times, it could take months to carry out a single transfer and that delays to the process could undermine the relationship pension administrators have with scheme members.
Margaret Snowdon, PASA president, said: “We’re committed to driving high standards and improved transfer option communications, helping members to make informed choices in a secure environment.
“Throughout the document we have raised questions which we invite the industry to provide responses on. We ask that we come together and work together to get the code implemented.”
Tackle pension scams
There is also a danger that lengthy processes could give fraudsters favourable ground to con savers.
James Ellison, chair of the PASA DB Transfers Working Group, said: “The time taken to process defined benefit (DB) transfers varies hugely, some taking months to execute. Unfortunately, delays damage relationships with scheme members and lead to a breakdown of trust.
“This can result in members making decisions which are not in their best interest, or worse still, increase the risk of becoming victims of pension scams.
“Scammers often use the time taken to process a transfer to create an impression of trustees seeking to hold on to a member’s money and to incite them. It is a horribly sophisticated process and there are lots of members already making poor choices.
“We are extremely mindful of needing to find the balance between member protection and their statutory right to take their pension in a different shape or form, via a flexible arrangement.
“As a group, our key objective is to create a framework to help deliver this balance. The code sets out to create faster, well-communicated, efficient and cost-effective strategies scheme administrators and wider stakeholders can execute.”
Clear objectives
The industry body has set out five principles underpinning the code’s framework around clarity, efficiency and information sharing.
They include:
- Member communications should be fair, clear, unbiased and straightforward,
- Members, and other stakeholders, should be kept informed of any delays in processing their transfers,
- Administrators should work with other stakeholders to encourage adherence to the objectives of the code,
- Communications should be designed to reflect best practice, adhering to template documents where possible, and;
- Working practices and processes should be designed to comply with the code including the target timescales listed.
The PASA had already come out with a DB pension guide in July 2019, but it said it was not comprehensive enough.
The consultation will close on 30 April 2020, with the code set to be released on 1 September 2020.
