The Pensions Regulator

Inducement offers

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Introduction
The employer's perspective
The trustees' perspective
The member's perspective
Important considerations
How to deal with inducement offers

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Introduction

This guidance relates to inducements or incentives (both referred to as inducements in this guidance) that are sometimes offered by employers to members of DB schemes to persuade them to give up accrued benefits in a DB scheme.

Inducement offers to scheme members tend to be monetary and usually involve:

• an enhancement to a transfer value; or
• a direct cash payment to the member; or
• both of the above.

The Pensions Regulator takes an interest in such inducements because one of our main statutory objectives is to protect members' benefits.

We recognise that employers may have business and commercial reasons for offering inducements to encourage members to transfer out of DB schemes, or to consent to rule changes reducing benefits (such as removing non-statutory post-retirement pension increases), and that such practices do not contravene current legislation. Employers should note, however, the Pensions Regulator's powers to issue contribution notices and financial support directions and should also consider our guidance on clearance and abandonment.

However, we also recognise that inducement offers create risks for members and issues for trustees.

This guidance, therefore, looks at inducement offers from the perspective of the employer, the trustees and the scheme members, and sets out our recommendations on how to deal with them.

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