The Pensions Regulator (TPR) has asked trustees to warn defined benefit (DB) scheme members looking to transfer to defined contribution (DC) schemes against doing so during the Covid-19 pandemic.

In its latest guidance update, TPR called on trustees to send letters to relevant members, warning them of the risks amid the crisis and urging them to consider the decision carefully.

The regulator said due that ongoing market volatility, and uncertainty for businesses and personal finances, members may be more likely to make “knee-jerk decisions” that affect their pensions.

“We are determined to do all we can to protect savers’ retirements from the unprecedented impact of Covid-19,” stated TPR chief executive, Charles Counsell.

“A decision to transfer a pension pot that’s taken a lifetime to build is a very serious one and we’d urge members to be very, very careful making any transfer decisions at this time.

“That’s why for the foreseeable future, anyone who is looking to transfer their benefits out of their DB scheme should be sent a new warning letter to make them stop and think as well as point them towards free, impartial guidance available from The Pensions Advisory Service.”

In its guidance, the regulator also urged trustees to highlight free and impartial advice available to members, such as from Pension Wise, and encourage them to take regulated advice to understand their retirement options.

Trustees were encouraged to identify the increased risks in how members are accessing their pension savings, and issue appropriate warnings about the risks and implications.

For any members requesting a cash equivalent transfer value (CETV), trustees have been asked to send them a template letter signed by TPR, the Financial Conduct Authority (FCA) and the Money and Pensions Service, which runs The Pensions Advisory Service.

To help minimise the risks posed by scammers, TPR has asked trustees to monitor CETV requests and inform the FCA of any “unusual or concerning patterns”, such as spikes or the same adviser across multiple requests.

Commenting on the update, The People’s Pension director of policy, Gregg McClymont, said: “We are living through a unique moment in recent history, with the economy having been locked down for the greater good, but at heavy financial cost to some individuals and households.

“The move by the regulator is to be welcomed. The problems in the DB to DC transfer advice market are now well known and understood."

Dalriada Trustees professional trustee, Vassos Vassou, added: “Most trustees already highlight the risks to members of transferring and provide details of where they can get help with advice.

“Trustees recognise the pang of anxiety associated with members requesting transfers when our own instincts are telling us the transfer may not be in their best interests.

“The additional material the regulator is asking trustees to include in the information provided to members will provide sense and balance for members before they proceed with a what could be a life changing and potentially devastating decision.”

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