The time taken to process defined benefit (DB) transfers varies hugely. Some transfers take months to execute, for a number of reasons. Unfortunately, whether the criticism is fair or not, delays can damage relationships with scheme members and lead to a breakdown of trust. This can undermine the industry’s objective to reinforce the value of safeguarded rights, leaving consumers at the mercy of a sometimes dysfunctional advice market, or worse still, scams. Scammers often refer to the time taken to process a transfer to create an impression of trustees seeking to hold on to money belonging to the member.
The complex nature of safeguarded rights creates a challenge for drafting an efficient and standardised transfer administration time frame. Strong and ever-increasing governance also legitimately adds time to the process.
PASA is mindful of finding the balance between member protection and an individual’s statutory right to take their pension in a different shape or form, via a flexible arrangement. We’re committed to driving high standards and improved transfer option communications, aiding members to make informed choices in a secure environment.
Whilst there are lots of members who could already be making poor choices, the key objective of the PASA DB Transfers Working Group is to create a framework to help deliver balance. As an industry, we must come together and work to implement this Guidance. The Guidance sets out to create faster, well-communicated, efficient and cost-effective strategies which scheme administrators and the industry as a whole can execute.
Part one of this Guidance relates to ‘standard or straightforward cases, whilst Part 2 will cover ‘non-standard’ or complex cases.
The group launched a consultation on it’s DB Transfers Code of Good Practice at the PASA Annual Administration Conference in February 2020. The Code combines the Part 1 Guidance and Part 2 Guidance on ‘non-standard’ or complex cases. The consultation will close on 30 September 2020 and the Code will be published by the end of 2020.