10 weeks is appropriate for DB to DC transfer, say respondents

The 111 participants also answered questions on smaller scheme consolidation, the NHS Pension Scheme tax rules, and smaller scheme governance.

Read the results in full.

The majority of respondents (58%) agreed that 10 weeks is an appropriate length of time to conduct a full DB to DC transfer. Of these, one said: "If the independent financial adviser (IFA) has the resources and knows what they are doing, then 10 weeks should be ample time."

Another pundit said: "It's a challenging target but should be achievable in the majority of cases, provided the clock can be stopped to allow for additional due diligence where necessary to safeguard the member's interests."

"As long as the industry gets its act together," stated another. "IFAs need to request the correct information at the start and schemes need to provide information, as far as possible, in a pre-defined format."

One fifth (21%) did not think 10 weeks is an appropriate length, with some suggesting it should be a much shorter period. Others thought it is not long enough, which one saying: "10 weeks is fine if you only receive one transfer request every couple of months! When you're receiving 20 every couple of weeks, it's not practical."

 

The industry was split in their decision on whether The Pensions Regulator (TPR) is right to accelerate the consolidation of smaller schemes, with 47% agreeing and 37% against.

Of those who agreed, one said: "Governance standards are too low and costs are disproportionate. We need fewer, bigger, efficiently-run schemes."

Another person said: "It will help lots of people who have bits and pieces of pensions dotted about here, there and everywhere due to multiple job changes."

Of those who disagreed with the regulator, one said: "It is not TPR's job to decide what type or size of schemes are operated by companies. If consolidation is desirable, the DWP should legislate for it."

"Some small schemes are very well run and their employers have valid strategic reasons for continuing them. TPR overburdening the well-run schemes with compliance in pursuit of those with poorer governance is not justifiable," a different person added.

The remaining 16% did not know, with one noting: "Some smaller schemes operate well. Bigger is not always better."

 

Half of this week's respondents agreed with TPR's view that governance of smaller schemes is generally poor, with one suggesting: "Good governance costs money, and smaller schemes can only do this effectively if they have the necessary resources."

A different person added: "From discussions I have had with trustees of small schemes, they admit to having limited knowledge and poor resource and delivery."

Of the 31% who did not agree, one said: "Some do very well but there is a small population where governance is not good. Independent trusteeship is a good way to address this."

Another person questioned: "Since we are told that over 75% of schemes are small, does this mean TPR reckons most schemes have poor governance?"

A number of others warned that the regulator should not generalise as some smaller schemes have very good governance.

Some 18% were unsure, with one commentator stating: "There are more badly-run small schemes than badly-run larger schemes - but that's due to the size of the governance budget, not the assets."

The vast majority (79%) of respondents did not think the government should amend pensions tax allowance rules specifically for high-earners in the NHS Pension Scheme. Of these, one commentator said: "If it was implemented then a precedent has been set and it won't be long before other high-earning public sector workers want the same benefit. Eventually it will filter into the private sector as well."

Another argued: "If the rules are to be amended they must be for ALL higher earners, both in DB and DC schemes, not just for the NHS scheme."

"The annual allowance should be abolished entirely to allow people to contribute as much as they want when they have the money. The lifetime allowance should be the only limit, which should be reviewed and set at an appropriate long-term level," suggested a different person.

Nearly a fifth (18%) agreed however, with one suggesting it will help workers have flexibility in terms of opting out of the scheme.

Another said it should be part of a general review of tax allowance rules.

Just over half the respondents thought it was right for TPR to pursue company bosses' personal assets to provide funds for DB schemes, with many stating it is only right when reckless or dishonest behaviour can be proven.

One commentator said: "If the company bosses have taken significant sums out of the business while the pension fund surplus has declined/deficit increased, then it is reasonable for the company bosses to make restitution to the scheme."

"They need to pursue those who are abusing the system - we have seen some appalling examples in recent times," said another.

Of the quarter (26%) that did not agree, one said: "A company boss is just one of a board of directors. TPR has to go after the group company that received the cash, not just the low hanging fruit."

"In the absence of fraud, it is illegal," noted another.

A further commentator doubted whether it would be possible to prove that personal assets had been gained at the cost of members.

Just over a fifth (22%) were unsure, with many suggesting it depends on the circumstances.

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• Topics
• Defined Benefit
• Pensions Buzz
• Pensions Administration Standards Association
• DB to DC transfers
• DB transfer
• TPR
• The Pensions Regulator
• Consolidation
• NHS
• NHS Pension Scheme