DB to DC transfers – Pensions Regulator consultation

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2 March 2015

The Pensions Regulator has produced a useful consultation document on DB to DC transfers and conversions and invited comments by 17 March 2015.

The consultation document is pretty clear, concise and accessible and is likely to form the basis of new guidance for DB pension scheme trustees faced with the tricky question of how to handle DB members wishing to transfer to a DC scheme.



For me, there are five key areas:

  1. There should be relatively few cases where such a transfer is actually in the best interests of the member – giving up guaranteed retirement benefits is not to be taken lightly. However, it is not the role of the trustee to second-guess circumstances: for instance, the passing on of the whole DC pot tax-free if death occurs before 75 may be attractive in a small number of cases
  2. Transferring members will be required to take independent financial advice if their cash pot equivalent value exceeds £30,000. Schemes will need to monitor this threshold and to check that advice has been sought – but will not need to pay or provide for this advice; they should instead provide information on finding FCA authorised advisers
  3. This is going to be a significant area for potential fraud – probably larger than the pensions liberation scandal. It will obviously attract bees to the jam-jar (as bank robber Willie Sutton is reputed to have said) “because that’s where the money is
  4. It should be second nature to trustees to realise that we must consider the balance of need of members: particularly those transferring versus those remaining. Schemes in deficit will need to consider their insufficiency report to help determine the relevant discount factors for transfer values
  5. We may see large and lumpy transfer requests coming in, which may have a small impact on the liquidity needs of Scheme investments

The full consultation document along with timetable can be downloaded from the Pensions Regulator website.

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  • Author: Martin Veasey
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