TECHNICAL TALK
PENSIONS WITH BENEFITS :
WHAT DIFFERENCE DID THE FCA ’ S TRANSFER AMENDMENT MAKE ?
Keeley Paddon Head of Pensions Technical SimplyBiz
On the 1st October 2020 , the Financial Conduct Authority ( FCA ) amended the definition of a pension transfer .
Definition : Pension Transfer
( a ) from any pension scheme with a view to obtaining a right or entitlement to flexible benefits under another pension scheme ; or
( b ) from an occupational pension scheme with a view to obtaining a right or entitlement to safeguarded benefits under a nonoccupational pension scheme ; or
( c ) from an individual pension contract providing fixed or guaranteed benefits that replaced similar safeguarded benefits under a pension scheme with a view to obtaining a right or entitlement to safeguarded benefits under a nonoccupational pension scheme or under a defined contribution occupational pension scheme .
In line with this , the relevant permissions required to give advice on a transaction meeting the definition of a pension transfer , a pension conversion or a pension opt-out , is now split into two parts :
A . Limited permissions : advising on transfers from GARs , including retirement annuities , only
B . Full permissions : the transfer , conversion or opting out of safeguarded ( non-GAR ) benefits
AT THE END OF JANUARY 2016 , THE DWP PUBLISHED A GUIDE ON ITS SITE AS TO WHAT IT CONSIDERED TO BE A SAFEGUARDED BENEFIT , AND WHAT IT DID NOT .
However , other pension transfers can still fall within ‘ full permission ’ scope and therefore the new rules will also apply , for example , a defined contribution pension with a safeguarded benefit , that is not a GAR – such as a Section 32 containing Guaranteed Minimum Pension ( GMP ).
Transferring or converting safeguarded benefits that are not GARs The revised definition of a pension transfer continues to include safeguarded benefits that are GARs , but the rules , as before , excludes them from these requirements to be carried out by a Pension Transfer Specialist ( PTS ). The new definition does however remove the transfer of any occupational scheme where there are no safeguarded benefits from the definition of a pension transfer . This means from 1st October 2020 all firms can advise on a transfer from an occupational scheme where there are no safeguarded benefits i . e . CIMP , SSAS , EPP etc . Firms wishing to advise on safeguarded benefits that are GARs only must continue to hold the limited pension transfer permission .
What is a safeguarded benefit ? At the end of January 2016 , the DWP published a guide on its site as to what it considered to be a safeguarded benefit , and what it did not . You can also find below . This is not a definitive list however , and legal advice may need to be taken by providers in some instances if it is not clear .
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