The Society of Pension Professionals (SPP) has called on regulators to focus on ‘practical solutions’ to ongoing problems with pension transfers.
Its response is to the FCA discussion paper: “Pensions: Adapting our requirements for a changing market”
The SPP focused its feedback on the single issue of transfer regulations, highlighting “numerous problems” with current rules. It said current regulations “are neither efficient nor in the consumers best interests and therefore require action.”
The SPP states that there has been strong pensions industry feedback, particularly from members of its legislation and administration committees. Both point out that the practical application of these regulations is causing problems. The SPP lists a number of given examples, which include provisions relating to overseas investments, red flags, ‘incentives’ and ‘safe lists’.
It says: “The flags are not clearly defined, members face unnecessary obstacles and pension trustees face the dilemma of whether to take a literal or pragmatic approach to the application of these regulations.”
It adds that on practice, this means that, “the current regulations deem too many incentives to be automatic red flags with trustees having to assess any incentives not falling within the examples provided – it is likely trustees and their legal advisers will err on the side of caution to avoid falling foul of the regulations.”
One potential solution put forward by the SPP is for government to, “consider amending the legislation to define certain incentives as automatic red flags, whilst others should only be considered red flags where there is at least one other trigger event.”
Amanda Cooke, Chair of the SPP’s financial services regulation committee says: “The regulations continue to result in delays in transfer processing, don’t align with the original policy intent and are causing schemes and members considerable problems.
“As a result, we felt it was right to concentrate on this issue to again highlight industry concerns with a view to securing a practical solution.”
