Pasa launches good practice guidance on DB transfers

The Pensions Administration Standards Association (Pasa) has launched its good practice guidance on defined benefit (DB) transfers, following delays amid Covid-19 and changing legislation.

The guidance, which was initially planned to be a code of practice, experienced delays after Pasa's initial industry consultation was interrupted by the coronavirus pandemic and further impacted by the fundamental changes to transfers that arose from the 2021 Transfer Regulations.

Plans for a code were then entirely scrapped, with the association shifting to a guidance approach as a reflection of the industry’s desire for greater flexibility in dealing with DB transfers, amid concerns that a code would be "too hard, too difficult and too prescriptive".

The guidance applies equally to all transfers, with the exception of a number of “sensible exceptions”, including bulk transfers, bulk member options exercises, and pension sharing and divorce cases.

Speaking at the Pasa Annual Conference 2022, Pasa president, Margaret Snowdon, highlighted six key principles from the guidance, including the importance of member experience, which she argued was “paramount”.

In addition to this, she emphasised that member communications should be timely, fair, clear, unbiased and straightforward, also stressing the need to keep members informed of any delays to the process.

"If we tell people there's going to be a delay they usually accept it," she explained, "it's stony silence that has them beating the path to the ombudsman's door, so you really ought to just keep tabs on what's happening and make sure that they understand."

The guidance also urged administrators to be mindful of the importance of safety and security when setting timescales, and to collaborate with other third parties to meet the objectives and principles of the guidance.

Despite avoiding a "prescriptive approach" by adopting guidance rather than a code, Snowdown noted that there is some attempt at standardisation in relation to collaboration with advisers, acknowledging that this is "quite a big ask".

In particular, Snowdon called on administrators to use the transfer template, which Pasa worked on with The Pensions Regulator and the Financial Conduct Authority, emphasising that this gives advisers the information they need to work with a member.

"It's now been owned fully by the FCA because they are determined that advisers use that template in their requests for information," she continued. "So what we're saying in the guidance is we want administrators to provide that scheme information in full and without hesitation."

Snowdon also stressed, however, that administrators only need to configure the template once for a scheme, explaining that none of the information in this is unnecessary and administrators should not be providing any less than the template.

Adding to this, Pasa DB transfers working group chair, James Ellison, commented: “This guidance sets out the principles and suggested simplified approaches for faster, safer and more efficient transfers which comply with regulations.

"The proposed processes aren’t prescriptive – administrators are free to adapt them as necessary to fit their preferred operating model. However, the principles of the guidance should be followed at all times.”

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