a) What is the role of TPR?
b) What are the statutory objectives of TPR?
c) What are the powers of TPR?
a) To ensure:
- schemes are adequately funded
- operated in the best interest of members
- employers meet obligations to enrol staff
b)
1. Protect members of occupational pension schemes
2. Protect benefits of members (where there is direct payment involved)
3. Promote and improve understanding of good administration of work based schemes
4. Reduce risk of pensions entering PPF
5. Maximise employer compliance
6. Minimise adverse impact on sustainable growth
c)
1. Investigating schemes
2. Putting things right
3. Acting against avoidance
The role of trustees
- Provide a statement of entitlement within 3 months of request, and once in every 12 month period
- Decide on what basis the transfer value will be calculated
- Decide whether ICE should be increased/decreased
- Communications in line with statutory requirements
- Advise member whether they need to take advice
- Check advice has been received
- Check scheme is able to receive funds
- Pay to receiving scheme
Statutory right to transfer:
a) Flexible benefits
b) Safeguarded benefits
a) Uncrystallised: any time
b)
- Uncrystallised
- No longer in accrual
- Made an application within 12 months of statement of entitlement
- More than 12 months before NRA
- Right to transfer once every 12 months
Statutory rights override scheme rules. In general the right to transfer only applies where a member transfers a whole scheme (except where GMPs)
- Appropriate: adviser/firm authorised and regulated
- Independent: not connected with scheme or trustees
- CETV over £30k
- Check: trustees must check advice has been received
(evidence must be in writing from adviser to member and feature FCA number and member/scheme)
What is appropriate independent advice?
- Appropriate: adviser/firm authorised and regulated
- Independent: not connected with scheme or trustees
- CETV over £30k
- Check: trustees must check advice has been received
(evidence must be in writing from adviser to member and feature FCA number and member/scheme)
What factors need to be taken into account when determining attitude to transfer risk?
- Risks and benefits of staying the ceding scheme
- Risk and benefits of transferring into flexible arrangement
- Client’s attitude to certainty of income in retirement
- Whether the client would like to access funds in an unplanned way
- Likely impact on sustainability of funds over time
- Client attitude to and experience of managing investments or paying for advice
- Clients attitude to restrictions on their ability to access funds
When can a member take early retirement through Ill health?
- May be available before age 55 depending on the severity of the condition. The trustees have discretion to pay full unreduced benefits (enhanced benefits only likely to be available for active members)
- Scheme administrator receives medical advice
- Medical advice confirms that member is unable to carry out occupation
- As a result the member has ceased their occupation
- Member receiving the pension will have the options to take PCLS in the normal way
Serious ill health - the member may be able to commute a cash lump sum
Which statutory instrument defined regulated activity for advising on the transfer of safeguarded benefits?
FSMA 2000
Risk factors the FCA would expect firms to consider when establishing the risk warnings appropriate for a consumer considering transferring their benefits from a DB scheme
- Health
- Loss of any guarantees
- Whether the client has partner/dependents
- Inflation
- Whether the client has shopped around
- Sustainability of income
- Tax implications
- Charges
- Impact on means tested benefits
- Debt
