Multiple reasons have been given. It allows trustees more time to calculate transfer values (CETVs) as the coronavirus has made it more difficult of the underlying value of the pension funds.
It is also because pension administrators are also likely to be under strain to provide the usual payroll contributions and payments to pensioners and the pension transfer freeze may alleviate some of that pressure.
Concerns about increased defined benefit pension scams
Several articles also highlight that a three-month defined benefit pension transfer freeze may help people from being targeted by scammers looking to take advantage of the current financial climate.
At Tailormade pensions, our concerns from past experience shows that there continue to be many pension liberation schemes that could not only lose the individual’s pension fund, but the individual could also be left with a large unauthorised tax charge from HMRC.
We also continue seeing people advised to transfer defined benefit pensions into QROPS or International SIPPs with assurance bonds or investment bonds with large commissions on both the bonds and the underlying investments. These will prove disastrous in the current investment situation.
Summary – Three-month defined benefit pension transfer freeze
We at Tailormade pensions think that this is a sensible decision made in uncertain times and it may well protect pension scheme members from making short term decisions or being mis-sold a transfer that they later come to regret.
The views expressed in this article are not to be construed as personal advice. You should contact a qualified and ideally regulated adviser in order to obtain up to date personal advice with regard to your own personal circumstances. If you do not then you are acting under your own authority and deemed “execution only”. The author does not accept any liability for people acting without personalised advice, who base a decision on views expressed in this generic article. Where this article is dated then it is based on legislation as of the date. Legislation changes but articles are rarely updated, although sometimes a new article is written; so, please check for later articles or changes in legislation on official government websites, as this article should not be relied on in isolation.
This article was republished on 30th March 2020
- Who should transfer their UK Pension?
- Final Salary Pension Transfer Advice
- Final Salary Pension to QROPS
- Recognised overseas pension schemes
- FCA Pension Transfer Consultation
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