Law360 is providing free access to its coronavirus coverage to make sure all members of the legal community have accurate information in this time of uncertainty and change. Use the form below to sign up for any of our weekly newsletters. Signing up for any of our section newsletters will opt you in to the weekly Coronavirus briefing.
Sign up for our Employment UK newsletter
You must correct or enter the following before you can sign up:
Thank You!
Law360, London (April 29, 2020, 10:36 AM BST ) Long-term savers planning to move their pensions funds out of "gold-plated" final salary schemes will receive a letter from The Pensions Regulator warning them of the risks during the current period of market volatility, under plans announced Wednesday.
TPR said trustees of defined benefit pension plans would send the letters to members who seek to move their retirement funds into defined contribution schemes during the COVID-19 pandemic.
The regulator has warned of the potential for scammers seeking to exploit the anxieties of savers over the economy to get them to transfer their savings.
"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," Charles Counsell, the regulator's chief executive, said.
"That's why, for the foreseeable future, anyone who is looking to transfer their benefits out of their defined benefit scheme should be sent a new warning letter to make them stop and think," he added. The letter will also refer savers to guidance from the Pensions Advisory Service.
The U.K. introduced pensions freedoms rules in 2015, allowing long-term savers to transfer funds out of defined benefit schemes into other types of pension pots. Last year, £34 billion ($41.6 billion) was transferred out of DB schemes, according to numbers from the regulator.
In 2018, however, poor advice from rogue companies led to £40 million being withdrawn from the "gold-plated" British Steel Pension Scheme. Many savers ended up losing their entire savings after placing their money into poor investments.
The warning echoes an earlier note of caution two weeks ago from the Association of British Insurers, which urged savers struggling with financial woes during the current crisis not to cash in on their pensions early.
"Lockdown will not last forever, but the decisions you make today about your pension could impact on your standard of living for years to come," Yvonne Braun, a director of policy at the association, said at the time.
--Editing by Ed Harris.
For a reprint of this article, please contact reprints@law360.com.
