Andrew Warwick-Thompson: This is not a case of trustees behaving badly
The trustees of the Cushon Master Trust have written to the pensions and financial inclusion minister seeking clarification over transfer regulations.
The move comes after PensionBee said yesterday (4 July) that a number of pension providers were taking advantage of the new rules - adding additional steps to hinder the transfer process, consequently causing genuine pension transfers to be delayed or blocked.
This morning B&CE hit back at these claims - saying the Occupational and Personal Pension Schemes (Conditions for Transfers) Regulations 2021 meant trustees had to ‘red flag' issues such as the presence of an incentive in the transfer, something it said included some of the marketing incentives offered by providers such as PensionBee.
Cushon Master Trust has now said the legal advice it received summarised the problem facing scheme trustees - that a ‘red flag', such as an incentive, doesn't just take away right of a member to demand a statutory transfer, but also the ability of a pension scheme to make one.
It added it had been told "the legislation is clear" and the market would have to live with that "unless and until" the regulations were changed.
The scheme said it was not blocking transfers - noting that, under its scheme deeds and rules it was able to allow non-statutory transfers - but noted this required them to follow a more stringent process.
The trustees of the Cushon Master Trust explained: "We are able to allow non-statutory transfers, but in these instances the trustees are required to apply more stringent checks and follow more robust processes to ensure members' interests are protected. The trustees have also written to the minister of pensions and financial inclusion to request clarification on the regulations in light of the legal advice we have received. We are awaiting a response."
Andrew Warwick-Thompson, a trustee of the Cushon Master Trust, added: "This is not a case of trustees behaving badly, but of regulations that have been drafted badly coupled with providers offering incentives to consumers to transfer to their products which are caught by those regulations.
"There are two possible solutions, which are not mutually exclusive - either the Department for Work and Pensions (DWP) should fix the drafting and/or providers should stop offering transfer incentives."
