Possibility of legislation in respect of enhanced transfer values
Pensions minister Steve Webb warned at the NAPF conference that the government will legislate against enhanced transfer values and pension increase exchange exercises if the industry fails to raise standards in the next 12 months.
The minister said that the prevalence of incentive exerciess 'feels a bit like a closing down sale'.
He confirmed that the government is seeking legal advice on whether cash incentive payments can be banned.
Pension increase exchange exercises involve the member giving up future increases in their pension for a one-off uplift in their payments. An employer undertaking an enhanced transfer value exercise will offer employees an enhancement or incentive to encourage them to switch from a defined benefit to a defined contribution scheme.