The Pensions Regulator

Code of practice 04
Early leavers

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Giving effect to the member's rights

24. On receiving the member's written reply the trustees must, within a reasonable period, do what is needed to carry out the member's election.
25. If the member is exercising their right to a cash transfer, they must specify how it is to be used. Cash transfers can be used to acquire benefits or rights under another occupational or personal pension scheme, or to purchase an annuity, or in any other way that the legislation may prescribe.¹⁹
26. If the member chooses to take a contributions refund, they may require the trustees to pay it directly to them, or at their direction to someone else.²⁰
27. The Regulator expects that trustees or managers will give effect to a member's rights without unjustifiable delay after the member has elected how they wish to receive them, and in any event this should normally be within three months of the member making the election.
28. In exceptional circumstances a longer period may be justifiable.

Default procedure

29. Where a member does not reply to the trustees or managers to exercise the right to a cash transfer sum or contribution refund ²¹ within the reply period (or within that period as extended by the trustees or managers), the trustees or managers may, within a reasonable period from the reply date or from the end of any further period allowed by them, pay the contribution refund to the member. ²²
30. The Regulator would expect the trustees or managers to allow a period of one month after the reply date before paying a member a contribution refund (as an exercise of the default option).

Contracting-out

31. If a scheme is contracted out of the S2P and there is the possibility of the payment of contributions equivalent premiums to re-instate the member's rights in the S2P, action will need to be taken within six months from the date they leave service. Accordingly, the total of the period allowed to notify a member of their rights, the reply period, and the default period, should come to less than six months to correspond to this period. In order not to prejudice the member's position, in these circumstances the Regulator would expect to see them notified of their rights as quickly as possible.

19 Section 101AE of PSA 93
20 Section 101AG(4) of PSA 93
21 Section 101AB of PSA 93
22 Section 101AH(1) and (2) of PSA 93

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