Max Ballad

Legal Director

NEWS   |    April 24, 2018

Max Ballad comments in Pensions Age on DC Bulk Transfers

Following a consultation that was published in Autumn 2017, the government published a response on simplifying the defined contribution (DC) scheme consolidation.

The Department for Work and Pensions (DWP) amended the requirements for DC bulk transfers so that the advisers must not have provided advisory, administration or investment services (rather than any work) to the receiving scheme, service provider or sponsoring employer (or a connected firm) in the past year (rather than the past five years).

Legal Director Max Ballad commented that DC transfers without member consent have always been tricky because you have to think about the likely output of the investments.

“It’s different from comparing two sets of benefit promises in the defined benefit environment and needs a different approach. It’s not an actuarial or legal question. Now we have some open doors, especially for master trusts.”

The problem has been that those conditions were drawn up with de¬≠fined benefit schemes in mind, “The requirement for the actuary to certify that the transfer credits to be provided in the receiving scheme will be broadly no less favourable was not very meaningful in a DC context.”

He notes that most bulk transfers will be prompted by proposals from the employer and trustees will still need to consider whether a bulk transfer is a proper exercise of their powers. If the proposed transfer will not be to a master trust, the trustees may need to obtain and consider written advice from an “appropriate adviser”.

“The key point here is that the adviser must be independent from the receiving scheme or any of its advisers. There is a lack of detail about the advice to be given which may be a good thing in that it gives the trustees some flexibility.”

Read Max’s comments in Pensions Age

The views in this article are intended for general information purposes only and should not be used as a substitute for professional advice. Arc Pensions Law and the author(s) are not responsible for any direct or indirect result arising from any reliance placed on content, including any loss, and exclude liability to the full extent. Always seek appropriate legal advice from a suitably qualified lawyer before taking, or avoiding taking, any action. If you have any questions on the points raised in the above, please do not hesitate to get in touch.

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