The UK’s Department for Work and Pensions (DWP) wants to streamline rules governing defined contribution (DC) bulk transfers to remove barriers to consolidation.
The DWP published a consultation paper yesterday calling for industry feedback on current arrangements, which are based on defined benefit bulk transfer rules.
The consultation reflects a growing desire from the government and regulators to consolidate small pension funds in an effort to improve governance and efficiency.
The government wants to make it easier for employers to consolidate multiple DC pension schemes into one, or to transfer schemes into a master trust arrangement.
In the consultation document, the DWP said: “Our main objectives are to reduce unnecessary burdens while ensuring members are adequately protected, and modernise the provisions so they reflect the current pensions landscape.”
Bulk transfers without member consent are only permitted if the schemes involved have a “certain relationship” – either the same sponsoring employer, or a relationship between sponsoring employers.
The current rules make it difficult for transfers in some situations, such as when a company ceases to exist, leaving a DC fund without a sponsor, the DWP said.
The consultation is also seeking views on the future role of actuaries in DC bulk transfers.
The current rules require an actuary to sign off on any transfer, but the DWP suggested other professionals might be better suited.
The DWP’s consultation document is available here.
The deadline for responses is 21 February.