FT Adviser (25/03/2019) – The Pensions Administration Standards Association is working on new standards for ‘white’ defined benefit transfers, with the aim to reduce this process to fewer than 10 days.
Margaret Snowdon, president of the professional body, told FTAdviser that up until now companies had been setting their own standards for these transactions but were generally taking too long.
The organisation is therefore working on new guidelines for its members for making a white transfer, which means the recipient scheme and financial adviser are known to the trustees and administrators so they don’t have to go through due diligence processes because they’ve carried them out them before.
She said: “There is no reason why a white transfer cannot be done in a matter of days, so we are going to say that a DB transfer which is clearly not a scam should be done in a matter of days, it could be five, six or eight days – that is still to be determined – but it won’t be 20 days or three months.”
Financial advisers have previously complained about delays in the transfer process, which can lead to problems as a cash equivalent transfer value is only valid for three months before it expires.
This has led to the regulators working on a transfer template, which was supposed to be published last year, but has been delayed.
Pasa proposed to define the time period of a transfer from after the scheme receives all the information from the member or its financial adviser to when the transfer is complete.
There will also be time limits for other parts of the process, such as acknowledging the transfer request, for which Pasa intends to set a standard one-day time limit.
According to Alan Chan, director and chartered financial planner at London-based IFS Wealth & Pensions, the new standards would be very much welcome and “impressive if it’s doable”.
He said: “I’m not sure how or when they plan to screen the receiving scheme or the financial adviser.
“Unless Pasa was to keep a panel of legitimate receiving schemes and DB transfer advisers and have the resources to continually update this, then I imagine it would be conducted by the scheme at the point of receiving the completed transfer documents.
“If it’s the latter, I’d question how long the screening process itself would take because if that takes one month in itself to do, then it’s probably not really saved much time at all. But to have some sort of standards with the aim of speeding up DB transfers is a great start and encouraging to see.
“The fact that the receiving scheme and the adviser have been screened beforehand will give also some reassurance to the members that they are not dealing with scammers.”
Full article link: https://www.ftadviser.com/pensions/2019/03/25/industry-body-proposes-10-day-limit-for-pension-transfers/