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Transfers

Important

Early draft of the code of practice

This code is not in force yet. It is an early version for the new code of practice consultation.

To give us feedback on issues such as the design, usability and navigation of this code, email us at webfeedback@tpr.gov.uk.

You can also read more information about the consultation.

Published: 17 March 2021

Many members of pension schemes have a right to transfer their benefits to another pension scheme, either by legislationTR1 or scheme rules. Governing bodies should ensure they have the necessary administrative procedures to deal with transfer requests without undue delay.

Note: The governing body should also maintain accurate and complete records of all requests received and the transfers that have been made. See Administration, Financial transactions and Scheme records for more information about our expectations in these areas.

The transfer process under legislation will typically begin when the governing body receives a request from an eligible scheme member for a statement of entitlement. This will include their cash equivalent transfer value (CETV). The governing body must provide the statement within two months of receiving the request, unless this information has been provided in response to a request in the previous 12 months.TR2

For a member with defined benefit (DB) benefits, the CETV represents the actuarial calculation of the member’s benefits within the scheme. As part of the calculation,TR3 the scheme actuary and governing body will be required to make assumptions about the course of future events affecting the scheme and the member's benefits.

For a member with defined contribution benefits (DC) scheme, the CETV will be the total of the accumulated contributions made by and on behalf of that member. This sum will include any investment gains or losses.

Transferring member benefits

Before a governing body processes a request to transfer member benefits, there are certain checks they should perform. There are also specific requirements that must be met in relation to members wishing to transfer from a DB scheme to a DC arrangement. Our expectations for transferring member benefits can be found below.

Before transferring member benefits

  • Check the receiving scheme to ensure it is:TR4
    • able to accept the transfer
    • willing to accept the transfer
    • a scheme to which a transfer can be made under the relevant legislation
  • Where they suspect the receiving scheme is not a legitimate arrangement, they should refer to the Scams module.
  • If they believe they will not meet the legislative deadlines, they should ensure they make an application to us before the deadline (see the extension section below).
  • Where they suspect the receiving scheme is not a legitimate arrangement, they should make a report to Action Fraud.

The governing body of a DB scheme:

  • must notify us of transfers of more than £1.5m or, if lower, 5% of scheme assetsTR5
  • should monitor transfer requests and the subsequent impact those transfers could have on scheme funding
  • should consider the effect of a transfer of those members with a large transfer value relative to the scheme

Specific requirements for DB to DC transfers

Scheme members must take appropriate independent advice when transferring benefits valued at £30,000 or more from a DB to a DC arrangement. The governing bodies of DB schemes that receive a request to transfer or convert member benefits of £30,000 or more must check the scheme member (or survivor) has received the appropriate independent advice.TR6

Members will receive written confirmation from their adviser, which they will be able to provide to the governing body.TR7 Governing bodies must check the adviser has the correct permission to give the adviceTR8 by verifying their details on the FCA's Financial Services Register. Governing bodies must not fulfil any request where the advice provided is not from an adviser whose firm is listed on the FCA’s register.

We have set out our expectations for the governing body regarding checks required in the list below.

Checking written confirmation

  • Retain a copy of the written confirmation that advice was received by the member.
  • Ensure records are held of:
    • who conducted the check
    • when this was conducted
    • evidence that the adviser's firm or company was on the Financial Services Register before the transfer of benefits was made
    • retain these records for at least six years
  • Be alert to the risk of fraudulent communications submitted to the scheme.
  • Where suspicions arise, contact the advisory firm directly using the contact details as listed on the FCA register to check that firm has a record of providing the advice.
  • Contact the transferring member immediately if there is a problem with verifying the adviser's permission and inform them that the transfer will not proceed until the appropriate advice has been received.
  • Keep records of payments of the transfer, including details of the receiving bank account, and confirmation of receipt by the receiving scheme.

Timeframes to complete transfers and extension requests

Governing bodies are required to complete transfers within six months.

For DB benefits, this is measured from the guarantee date provided in the statement of entitlement.TR9

For DC benefits, this is measured from the date of the request for the transfer to be made.TR10

Where a governing body is unable to complete the transfer in the required time, there are limited circumstances where we may grant an extension to this time period.TR11 Any application must be received by us before the six-month period expires. See our DB to DC transfers guidance for further details.

Glossary and legal references

Cash equivalent transfer value

The cash value of pension benefits, calculated in accordance with legislation. The value may change and is typically provided as at a certain date and (for DB benefits) can be guaranteed for a certain period.

TR1Part 4ZA Pensions Schemes Act 1993
[Part 4ZA Pensions Schemes (Northern Ireland) Act 1993]

TR2Regulation 14 of the Occupational and Personal Pension Schemes (Disclosure of Information) Regulations 2013
[Regulation 14 of the Occupational and Personal Pension Schemes (Disclosure of Information) Regulations (Northern Ireland) 2014]

TR3Part III of The Occupational Pension Schemes (Transfer Values) Regulations 1996
[Part III of The Occupational Pension Schemes (Transfer Values) Regulations (Northern Ireland) 1996]

TR4Section 95(2) Pension Schemes Act 1993
[Article 91(2) Pensions Schemes (Northern Ireland) Act 1993]

TR5Section 126(1)(a) and (b) of the Pensions Act 2004 and Pensions Regulator (Notifiable Events) Regulations 2005
[Article 110(1)(a) and (b) Pensions (Northern Ireland) Order 2005 and Pensions Regulator (Notifiable Events) Regulations (Northern Ireland) 2005]

TR6Section 48 and 51 of the Pension schemes Act 2015

TR7Regulation 7 of the Pension Schemes Act 2015 (Transitional Provisions and Appropriate Independent Advice) Regulations 2015
[Regulation 7 of the Pension Schemes Act 2015 (Transitional Provisions and Appropriate Independent Advice) Regulations (Northern Ireland) 2015]

TR8Regulation 11 the Pension Schemes Act 2015 (Transitional Provisions and Appropriate Independent Advice) Regulations 2015
[Regulation 7 of the Pension Schemes Act 2015 (Transitional Provisions and Appropriate Independent Advice) Regulations (Northern Ireland) 2015]

TR9Section 99 2(a) Pension Schemes Act 1993
[Article 95 2(a) Pensions Schemes (Northern Ireland) Act 1993]

TR10Section 99 2(b) Pension Schemes Act 1993
[Article 95 2(b) Pensions Schemes (Northern Ireland) Act 1993]

TR11Regulation 13(a) Occupational Pension Schemes (Transfer Values) Regulations 1996
[Regulation 13(a) of The Occupational Pension Schemes (Transfer Values) Regulations (Northern Ireland) 1996]