UK - Consultants have warned that OPRA's temporary relaxation of transfer rules will leave trustees open to claims from members.
Watson Wyatt believes the move does not bind the pensions ombudsman and members could bring complaints against trustees for delaying a transfer request.
Watson Wyatt technical consultant Janine McGahon said: “The OPRA guidance may be problematic for a member who wants to leave a scheme, so it would be possible to complain to the ombudsman.”
The regulator’s move precedes amending legislation – due out in June – which will allow trustees to take account of a scheme’s current funding position to ensure that when members transfer out, they do not take more than their fair share.
McGahon said: “At the moment, there are very limited circumstances where trustees can reduce a member’s transfer value if a scheme is underfunded.
“It can only be reduced in accordance with MFR valuation, which is carried out every three years. So the valuation could be three years out of date and the funding position is likely to have deteriorated.”
But McGahon added that the ombudsman was likely to be reluctant to undermine OPRA’s stance, particularly as it would have discussed the matter with the department for work and pensions before making the decision.
Mercer actuarial consultant Jonathan Lawlor agreed that whether a claim could be made to the ombudsman over transfer values was a “grey area”.
“At most this suspension will last three to four months, and by the time the case reaches the ombudsman, transfer values will be quoted to the member.
“Although the member could say that had they had the valuation three months before it would be higher.”
He added that trustees had to be “very careful” about whether they were providing a guaranteed statement of benefits or merely a valuation of pension benefits in the next few months.
This week's edition of Professional Pensions is out now.
Ben Gunnee reflects on 2018 and talks about the Fiduciary Management trends to keep an eye on in 2019
Lloyds Banking Group secured 630,000 new pension customers last year, according to its 2018 annual results.
Guy Opperman has rejected calls to speed up changes to auto-enrolment (AE) despite increasing pressure to boost contribution rates and overall savings pots.