Industry guidelines aimed at tightening up how pension scheme sponsors incentivise members to transfer out of their scheme will change how offers are made rather than bringing an end to the practice, JLT Pension Capital Strategies said today.
Published in June, the Code of good practice on incentivised transfer exercises sets out standards and processes to be used by sponsors when they enhance the amount they would otherwise offer for a member to transfer out of their scheme - known as an enhanced transfer value.
Simon Taylor, director of JLT, said the changes the code would bring about were a good thing. 'We anticipate that ETVs are not finished and offers will continue to be made to members,' he said.
'The shape and methodology of how offers are created may well change, with an increased emphasis upon making the "right type of offer" to the "right type of member" and this is obviously good news.
'In our experience many scheme members welcome the opportunity to understand the options available. It is vital that members get the right information and support to be able to understand the full picture, which is why advice must be made available.'
Taylor noted that the 'vast majority' of those involved in running incentivised transfers were committed to supporting the code, but stressed that the 'spirit' of the document should be followed as well as the guidelines themselves.
'The new code of practice provides a clear framework for the industry to follow when delivering incentivised transfer offers. The Pensions Regulator has recently issued revised guidance which commends trustees to comply with the code. It should be noted that the spirit of the code should be followed, and not just the letter.'
He added that the benefits ETVs offered to schemes meant they would remain in the 'genuine armoury of legitimate exercises' available to sponsors looking to de-risk.
'It is our understanding that savings can still beachieved against buy-out costs on prudent assumptions, but the members must have access to advice.'