FRC: trustees reluctant to allow DB to DC transfers
The number of transfers from defined benefit (DB) to defined contribution (DC) schemes has been lower than expected, according to the Financial Reporting Council (FRC).
A review by the FRC's Joint Forum on Actuarial Regulation (JFAR) on transfers found only a small increase in actual transfers despite a rise in requests for transfer values on the back of the April freedoms.
Transfer activity increased mainly among the over-55s for whom the freedoms included the opportunity to cash in their funds, and among those with large transfer values. However the initial spike in transfer activity may not have been as great as expected.
This was partly due to the lack of products and providers able to accept transferred funds, and the complexity of the transfers.
The review also found evidence that some trustees were not actively promoting transfers.
However, it found some employers recognised the opportunity to de-risk their DB schemes and were showing interest in the freedoms.
Another reason given was that members were recognising the value of their DB benefits.
FRC chief executive and JFAR chairman Stephen Haddrill (pictured above) said: "As we know, the new pension freedom rules change the landscape for people saving for their retirement.
"It is vital, therefore, that the quality of actuarial work that supports the market is of the highest quality. As a result of this review, I'm pleased to see the JFAR has decided it will monitor ongoing transfer activity and related actuarial matters."
The review was conducted between April and October 2015, and received 311 scheme actuaries, representing 35% of all DB schemes in the UK.
Discussions were also held with The Pensions and Lifetime Savings Association and The Pensions Advisory Service.
JFAR was established in 2013 by the FRC, the Institute and Faculty of Actuaries, the Financial Conduct Authority, the Pensions Regulator and the Prudential Regulation Authority.
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