Potential delays to transfers between registered pension schemes

From April 2017, new legislation implemented within The Pension Schemes Act 2015 (Transitional Provisions and Appropriate Independent Advice) (Amendment) Regulations 2017 will have the impact of delaying certain transfers that include guaranteed benefits and safeguarded rights. It will particularly have an impact on those cases that might otherwise have transacted automatically, such as through the Origo Options paperless transfer system.
 
Where the Origo system is intended to be utilised, the transferring scheme is usually unaware of the intended transfer away until it receives a request from the receiving scheme.
 
The legislation however, requires the trustees/managers of the transferring scheme (where the member’s benefits in that scheme includes guarantees or safeguarded rights) to provide a risk warning with regard to loss of those benefits at the first point at which it becomes aware that a transfer is being considered.
 
In the event of the use of an automated transfer system, this is likely to be when application for transfer of funds is received from the receiving scheme rather than when the transfer discharge papers are requested.
 
The risk warning, which is an opportunity for pause and review by the client, gives a two week period for consideration after which it warns the transfer could complete automatically.
 
Advisers operating in the pension transfer market should be aware of this new legislation especially if the transfer could be time critical, and they should plan accordingly.
 
A link to the Regulation is provided: http://www.legislation.gov.uk/uksi/2017/717/contents/made