Where a transfer value or cash sum is £10,000 or less, the new edition of the Code relaxes the requirements for advice* and guidance*.  It also does this if a pension is no more than £500 p.a. where an increase exchange is offered.

Instead, the Code (published on 1 February) says readily accessible guidance should be made available.

The other main change is some "boundary examples" to help those involved decide whether an offer of options is within the scope of the Code.  Briefly, if the offer represents "business as usual" for the scheme, it will be outside the Code.  Markers for this include the offer being without time limit, in the scheme's usual style and from the usual source.

The examples are not part of the Code and are a guide only.

Other new points:

  • when giving advice under the Code, an adviser must advise on the implications of a member’s choices for their dependants,
  • "full commutation" exercises are within the Code (a position the Board behind the Code had already announced),
  • clarification that offers to convert safeguarded DB rights into flexible DC rights are within the Code and
  • the revised Code applies to offers made after its publication.  An offer made in writing before then remains under the original version.

The Regulator's position on incentive exercises remains its Statement of July 2012.

An incentive exercise is where members receive an invitation or inducement to agree to change their existing DB benefits or to transfer them out of their employer’s scheme.

The original Code set out seven principles to guide employers.  Among them:

  • no cash incentives,
  • generally speaking, advice or guidance to members is required and
  • communications with members should be fair, clear, unbiased and straightforward.

The Code remains voluntary but has the Regulator's support and the Pensions Ombudsman and the Financial Ombudsman Service will have regard to it in their adjudications.

* "Advice" and "guidance" have particular meanings under the Code.

The Code and boundary examples are here http://incentiveexercises.org.uk/the-code-of-practice