Pension Transfer Value refused!

kaydee67

My husband has just requested a pension transfer value from his last employer (large university) and they have told him that, due to the current situation they cannot do this for at least 3 months. When we challenged this they said they had permission from the pension regulators to suspend all pension transfers for 3 months!!!! Surely this can’t be right or fair.

Any advice/insights would be very welcome.

Linton

It's correct.  See https://www.thepensionsregulator.gov.uk/en/covid-19-coronavirus-what-you-need-to-consider/db-scheme-funding-and-investment-covid-19-guidance-for-trustees.  The pension administrators may not have staff available and the volatility of the economic situation makes getting a true valuation difficult.

molerat

They are correct that the regulator has allowed them to suspend transfers.  These transfers and valuations are a manual exercise, not simply at the press of a button.

Marcon

kaydee67 said:

My husband has just requested a pension transfer value from his last employer (large university) and they have told him that, due to the current situation they cannot do this for at least 3 months. When we challenged this they said they had permission from the pension regulators to suspend all pension transfers for 3 months!!!! Surely this can’t be right or fair.

Any advice/insights would be very welcome.

It's being done to protect both the scheme and its members, because calculating a 'fair' transfer value in the current situation is extremely difficult. Be aware that the transfer process is going to take months even when he has his transfer value - and if it is £30K plus, he will need to take regulated advice before he can proceed with a transfer, assuming he wishes to do so. Use the time to get an IFA lined up.

Albermarle

Surely this can’t be right or fair.

A pension of this type is designed to offer a guaranteed income in retirement as its primary aim . I am sure this is still on offer on the same terms as before, so it is still OK.

As a secondary issue , potential pensioners can transfer out of these schemes ( although not an easy process nowadays) and only this is on hold due to the Covid issue . This is to protect the primary aim of the scheme. So it is fair to those left in the scheme.

MEM62

kaydee67 said:

Surely this can’t be right or fair.

In my opinion, it is both.  Apart from the reduced resources the pensions administrator may have now is not the right time to be making such decisions.  The world need to settle a bit first.  And in the great scheme of things, being patient for three months is hardly a big issue is it?   

L9XSS

The CETV value is usually “live” for 3 months. If DB transfer work is on hold then surely the CETV figure should be extended? As with most individuals I can access a CETV once a year. Another request after this “on hold period” would cost (in my case £150).

hyperhypo

Some db scheme admins now have updated software that provides an instant online transfer value...eg Mercer....as a new feature.  I'm not quite sure what the technical  point of this (stated) non-guaranteed amount is .....as compared to the (usual)  guaranteed for 3 months yearly request that one can make to the actuaries of the scheme.
 In my case the latest non-guaranteed value is now nearly 30% higher than both past postal request i'd made a couple of years ago (which were almost identical) , an almost incredible figure of significantly over £500k for what amounted to 12 years of contributions. A sign of the times. I can see why folk may be unnerved by such figures...solely based on a seemingly very high multiplier...and seek to disregard the other well documented caveats (life expectancy, alternative fixed income streams, partner with a significant DB scheme and so on) and become seduced by the number itself, and search for the means to realise CETV.
I haven't (yet), just re-read the compelling list of reasons not to.

L9XSS

The pensions freedom act brought in by Chancellor George Osbourne in my opinion didn’t really work for DB pensions. A number of “hoops” to jump through, potentially exorbitant fees. The FCA is I need a mess regarding regulation of DB pensions. In our “ambulance chasing culture” I can understand why firms are worried about giving advice on DB pensions transfers. Maybe the pension reforms introduced should have been for DC pensions only.

Silvertabby

L9XSS said:

The pensions freedom act brought in by Chancellor George Osbourne in my opinion didn’t really work for DB pensions. A number of “hoops” to jump through, potentially exorbitant fees. The FCA is I need a mess regarding regulation of DB pensions. In our “ambulance chasing culture” I can understand why firms are worried about giving advice on DB pensions transfers. Maybe the pension reforms introduced should have been for DC pensions only.

The 'pension freedoms' only applied to DC pensions.  Full stop.  However, DB fund members got a sniff of big bucks, and wanted in.

When the 'freedoms' were announced, the LGPS was swamped with calls from members - both current and deferred - who wanted to cash in 'their money'.  Many of the callers had obviously decided what to spend their windfalls on, with family holidays/daughter's wedding/new kitchen popping up time and time again.

Sandtree

molerat said:

  These transfers and valuations are a manual exercise, not simply at the press of a button.

In fairness that depends on the pension scheme and their arrangements. Certainly some providers of deferred annuities can give a TV at a press of a button (though they choose not to mainly due to often not great data quality and wanting to double check system records against paper). In theory there is nothing to stop a pension scheme from being able to do similar, particularly if one of the big administrators are doing the actual work but how many actually do is a separate question.