The draft Pensions Bill (see the first article above) includes a surprise provision enabling regulations to be made prohibiting anyone from inducing a member of a salary-related pension scheme to take a transfer payment. The provision will lapse if no regulations have been made under it within seven years of it coming into force.
In June 2012 a voluntary code of practice on incentive exercises was adopted by the pensions industry (see Pensions update: June 2012). One of the principles of the code is that no cash incentive should be offered that is contingent on a member’s decision to accept the transfer offer. This includes non-cash benefits which have value to the member. However, modest incentives (such as a gift voucher) designed to encourage members to engage with the process are acceptable under the code as long as they are not conditional on acceptance of the transfer offer.
It appears that the clause in the Bill has been included as a fall back position in case the voluntary code is not followed to the satisfaction of the Monitoring Board established to evaluate its effectiveness. If at any time the Board feels that the code is not working, it will recommend the introduction of regulations. The legislation is in its early stages and it seems likely that this provision will be subject to extensive comment and scrutiny in the coming months.