London, 4 August 2008 - Following calls last week for regulating bodies to impose a clear framework for companies offering cash inducements to scheme members transferring out, Aon Consulting is warning that unnecessary regulation could sound the death knell for DB pension transfers.

Paul McGlone, principal and actuary said:

“Regulation and guidance on transfers between DB and DC schemes is something that is already closely monitored by bodies such as the FSA and The Pensions Regulator. Calls for further regulation in this area could actually result in a situation where scheme members are worse off because of increased bureaucracy and greater costs, leading to companies finding transfers less palatable to offer.

“All pension schemes have a statutory duty to offer transfer values to members, and to advertise that fact to members.  Trustees consider carefully what level of transfer they can reasonably offer, and for those companies that want to offer members an option that is over and above what the Trustees can offer, they are providing members with additional choice.  There should be no pressure on members to accept a transfer from their scheme, and in practice most companies will offer to pay for members to receive professional advice from independent financial advisers that are FSA regulated.

“Guidelines and code of practices exist which sponsoring employers, trustees and financial advisers should all comply with.  This existing framework serves the purpose of ensuring scheme members get the full picture when evaluating whether transferring out of a scheme is in their interests.  If there are members who are being treated "unfairly" in the current environment, the answer is not for more regulation, but for the existing regulation and guidance to be properly followed. 

“The ultimate losers in this situation would be the members of DB schemes who would find a valuable option no longer available."