new transfer regulations in force from Wednesday 1
October
The Occupational Pension Schemes (Transfer Values)
(Amendment) Regulations 2008 provide for a scheme-specific basis
for calculating cash equivalent transfer values (CETVs) and
trustees, rather than the actuary, will be primarily responsible
for determining and verifying CETVs with scope for reduction or
increase dependant on actuarial advice.
The 2008 amending regulations will apply from October 2008
without any transitional period. Schemes can use the current GN11
methodology for applications received in August or September 2008
if trustees are confident that a statement of entitlement can be
issued before 1 October 2008.
The Pensions Regulator has issued draft guidance on calculating
transfer values for consultation. The consultation period expired
on 19 September. At the time of printing, it seemed possible that
the guidance would not be finalised before the new the Regulations
come into effect.
This could leave trustees in a difficult position, particularly
if you are currently undertaking a valuation and still waiting to
finalise this and agree it with the employer. Nevertheless, in
order to provide a seamless transition, trustees should have
embarked on a review of CETV arrangements so that they are in a
position to respond to the new requirements.
Of course, with most schemes still underfunded, it seems
unlikely that there will be any significant activity on transfer
values unless employers are able to provide additional funds. Even
then, this could make the position for trustees more complicated
and would therefore need careful consideration of all the issues,
including security for remaining members.
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