UK - The UK pension regulator (tPR) today has published draft guidance to help trustees of defined benefit schemes calculate transfer values for members, preceding new transfer value regulation coming into force later this year.

Regulation, to be introduced on October 1 this year by the Department for Work and Pensions (DWP), will oblige trustees to decide on which calculations the cash equivalent transfer values - the expected cost to the scheme of providing the member's accrued benefits - will be based.

TPR said today its draft guidance "provides suggestions of good practice on the calculation of the cash equivalent transfer values", including calculations for schemes in wind-up and dealing with enquiries in a PPF assessment period.

The value requires assumptions to be made about the future course of events affecting the scheme and the member's benefits, with factors including investment returns, mortality and inflation rates.

TPR's executive director Chris Dobson said today in a written statement the regulator welcomes industry views on its draft transfer values guidance, through a six-week consultation which is set to end on September 19.

Earlier this month, consultancy company Hewitt and UK pension buyout firm Paternoster went head-to-head over the issue of incentivising defined benefit pension scheme members to transfer out of corporate pension schemes.

Hewitt believes it could now be a good time for UK employers to go ahead with enhanced transfer value exercises, while Paternoster warned the use of cash inducements to incentivise DB members to transfer would lead to a significant loss of pension entitlement. (See earlier IPE story: ‘Hewitt and Paternoster disagree on pension transfers')

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