Trustees are advised to seek their own legal and financial advice in respect of the merits of any inducement offer, in order that they might form a view as to whether an offer represents good value and whether or not they should co-operate with the employer. Where trustees take the view that an inducement offer is not in the best interests of members, they should consider issuing their own announcement to members to highlight the risks involved.
The guidance emphasises the need for trustees to act in the best interests of members. Given the complexity of the financial decision that members will be faced with, the guidance states that trustees should ensure that members are given all the information they might reasonably need to make an informed choice. Should an inducement offer be made, trustees must ensure that they advise members of the importance of taking independent financial advice and that this message features prominently in the employer’s inducement offer. Trustees may also seek to persuade the employer to bear the costs of such advice, provided that the independence of the advice is not compromised.
In addition, trustees are reminded of the need to comply with the scheme’s governing provisions and section 67 of the Pensions Act 1995, which protect members’ accrued rights. Furthermore, trustees should bear in mind the requirements of the Data Protection Act 1988 when deciding whether or not to release the contact details of deferred members to employers who want to approach them with inducement offers.