FTAdviser.com

Advertising

New laws have come into force affecting pension transfer values, but the department of work and pensions claims that most occupational pensions schemes will remain unaffected by the latest changes.

Published on 11 April, the response to last year's consultation said the framework for transfer values was no longer the responsibility of actuaries, however, this would not impact on transfer values for scheme members.

A spokesperson for the DWP insisted pension scheme members would see no difference personally and said it would be only actuaries who would notice any real difference.

She said: "Actuaries used to set out the framework now they implement it as opposed to make it. Transfer values will remained unaffected by this latest announcement and there will be no rapid changes to how things are costed.

"If an employee wishes to transfer the money out into another pot then they should consult a scheme trustee as before. In turn that person is also obliged to seek advice from an actuary, however, this is a sign of continuity in that respect."

The spokesperson confirmed the changes would come into force from October of this year.

Laith Khalaf, pensions analyst for Hargreaves Lansdowne, said although changes would not impact on transfer values in theory, he was concerned about the lack of transparency for members.

He said: "There has been a lot of debate on this issue and the modifications do appear to be very sensible. Firstly trustees will be encouraged to take a scheme specific approach as opposed to a blanket one which is correct when you consider the different ages of members.

"The one thing which does not auger well is the lack of obligation on the part of the trustees to disclose their assumption on the transfer value. This is not at all transparent and I don't really understand why this has not been addressed. Members may start to think something is going on and they do have a right to know. After all it is their money."

The pensions regulator welcomed the publication and confirmed it would be publishing practical guidance for trustees so as to help them understand the different considerations and new requirements in relation to transfers

It also intends to offer general information for scheme members to help them compare the key risks with any potential advantages associated with taking a transfer to another pension vehicle.