UK - Hewitt Associates has struck back at the UK Pensions Regulator (TPR), saying the watchdog's recently published guidance on incentivised transfers was permeated by the "presumption of guilt".

The consultancy giant welcomed the "key principles" of the guidance, saying they underpinned a "well-run enhanced transfer value exercise", but it rejected the suggestion these exercises were not in their members' interests.

Alan Howard, pension consultant at Hewitt, said: "In particular, we do not agree with the regulator that only a minority of members are likely to benefit from accepting a transfer incentive.

"We also feel the comments on the possible legal action that could be faced by employers and trustees who engage in these exercises may unnecessarily discourage companies from carrying them out - even when they completely comply with the letter and spirit of the guidance."

He said that, as long as members had access to the full facts and suitable technical support, they should not be presumed to be incapable of taking an informed decision about future benefits.

"It's also disappointing," Howard added, "that the regulator seems to have failed to consider in any detail the possibility that defined benefit pension schemes may not pay out the full benefits promised to members, or any of the uncertainty that exists around schemes."

Howard said successful exercises could lead to "win-win situations" for employers and members.

"Employers can reduce the risks posed by their schemes and the volatility on their balance sheets, while members can have the opportunity to boost their income in retirement and gain additional flexibility," he said.

Earlier this week, TPR said trustees should understand that transfers are "not in members' interests" and that trustees should therefore approach any exercise "cautiously and actively".

David Norgrove, TPR chair, said the watchdog had seen some worrying behaviour since it published its initial guidance in 2007.

"There has been a box-ticking approach that has led to exercises being run without due consideration to scheme members," he said.

"As a result, we will be looking closely at exercises and working with other regulatory bodies to ensure standards are improved."
 

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