Of interest to all DB schemes is new the guidance published on the Code on Incentives Exercises.
In June 2012, an Industry Working Group of various pension practitioners and industry bodies published a Code on Incentives Exercises for Pensions (the Code), providing recommendations for the approach to be taken in respect of both enhanced transfer value offers and Pension Increase Exchange (PIE) exercises. It applies to all circumstances where an offer is made available to a member after the Code’s publication.
The Incentives Exercises Monitoring Board has now published guidance in Q&A form on the Code which confirms that one-off trivial and small pension commutation exercises are within its scope where:
- an objective of the offer is to reduce risk for the scheme or the sponsoring employer; and
- the offer is not one ordinarily available to members.
The Board has decided that guidance on the Code would be useful at this stage since the Budget 2014 flexibilities, which will be available from 6 April 2014, are likely to have a significant impact on incentive exercises.
The Board’s intention is to review the Code during 2015, once Government, legislation and market developments relating to the new flexibilities become clearer.
View the Code.
View the guidance.