UK regulator to clamp down on enforced transfers
UK - The chairman of the UK Pensions Regulator, David Norgrove, is set to clamp down on companies that encourage workers to switch from defined benefit (DB) to defined contribution (DC) schemes.
Norgrove is expected to say in a speech this week that some employers are applying excessive pressure on employees to accept enhanced transfers.
Enhanced transfer values (ETVs) involve employees being offered a financial inducement to swap their DB pension for a DC alternative.
The regulator has previously indicated that trustees should assume such exercises are not in the best interests of members.
Norgrove is concerned that the pensions industry could face a mis-selling scandal if it fails to clamp down on the use of ETV exercises.
The regulator is also set to publish its final guidance indicating how ETVs should be handled by trustees and the employer.
The watchdog hopes that the new rules will reduce transfers and block between 20 and 30 deals currently in the pipeline.
Norgrove said transfers from DB to DC could only be justified in a few situations, such as in ill-health where an impaired annuity could result in a higher income being paid.