17th July 2015

Prudential: You may have heard the FCA pension transfer rules have changed...

The Financial Conduct Authority have issued a Policy Statement detailing changes to their transfer rules, which came into effect on the 5th June 2015.

So what’s it all about?

Pension Transfer permission.

Amendments to the Regulated Activities Order in March 2015 mean that firms now require pension transfer permissions to be able to transact any pension transfers or pension conversions, even when not dealing with safeguarded benefits or providing the services of a Pension Transfer Specialist.

Changes to “Pension Transfer” definition

Transfers now include:

• Transfers for immediate vesting of benefits are now regarded as a transfer, quite a big change here!
• A new transfer category has been introduced, “pension conversions”.

“Pension Conversions”

This new category of “Pension Conversion” includes:

• Converting safeguarded benefits into flexible benefits within the same scheme, and
• Payment of an Uncrystallised Funds Pension Lump Sum (UFPLS) in respect of safeguarded benefits.

Safeguarded benefits

The term safeguarded benefits are referred to within the rules for both pension transfer and conversion. The Pensions Schemes Act defines “these as benefits other than:

• money purchase benefits, or
• cash balance benefits.

The Policy Statement provides further clarity.

Transfer Value Analysis (TVAS)/ Pension Transfer Specialists (PTS)

The Policy Statement gives details of when a PTS is required and when a TVAS must be provided.

So…

It’s a shift for some, as advising on non-occupational business or immediately vesting occupational business, previously never needed pension transfers permissions.

What is clear is firms without pension transfer permissions will need to attain them, or lose the ability to assist their clients with an important part of the retirement planning journey.

Further information is available on the PruAdviser website and you can also contact your Prudential Account Manager.

Pensions, Pension Reforms