Trustees: don’t risk a fine due to a simple process failure!
Reports show that transfer requests are steadily increasing in number and value. Suggestions are that this is due to the attractiveness of member choice and the introduction of new pensions flexibilities from 2015. So, with everyone talking about the impact of transfers-out on scheme liabilities and the possible benefit to pension plans, do trustees know whether their pension plan is caught by the requirement to notify the Pensions Regulator of the payment of large transfer values? If the pension plan is caught (generally because it is eligible for entry to the Pension Protection Fund) any decision by the trustees to make a transfer out or accept a transfer in where the transfer is the lower of 5% of the value of the pension plan assets and £1.5 million must be notified to the Regulator.
With larger transfers being a more frequent occurrence – we know many of our clients are being asked to consider them – trustees need to make sure they have a process in place for identifying and notifying where necessary, or else they could be subject to a nasty fine of up to £50,000, reducing to £5,000 in the case of individuals.
