Gregg McClymont – 2014 Parliamentary Question to the Department for Work and Pensions

The below Parliamentary question was asked by Gregg McClymont on 2014-04-01.

To ask the Secretary of State for Work and Pensions, what steps he plans to take to prevent private sector companies providing incentives for their employees to switch from defined benefit to defined contribution pension arrangements.

Steve Webb

We already have powers in place to legislate to ban cash incentive transfers. The incentive exercises code of good practice was created in 2012, and set out seven key principles that pension providers and their advisers must adhere to if they wish to offer their members incentives, including ensuring that members are given sufficient information to enable them to make an informed decision.

A large number of providers and independent financial advisers have signed up to the code, delivering a prompt solution to address this issue. The Government would encourage all providers to comply with the code.

Following the Budget announcement HM Treasury are currently running a consultation, “Freedom of Choice in Pensions” where it is considering whether people with a defined benefit pension should be allowed to transfer their accrued benefits into a defined contribution scheme. The outcome of this consultation will inform our thinking on what additional action, if any, the Government should take to restrict or ban pension providers from offering incentives