Minister Warns Over DF Pension Transfer Valuations Due To Covid-19 Instability

For retirement savers and would-be expats hoping to switch their cash from a defined benefit pension to a QROPS prior to moving overseas, regulators have now announced a three month delay.

Due to the coronavirus’s devastating and destabilising effect on the markets and property prices, regulators are having problems setting the correct transfer value and have announced a three-month delay to the normally fast process. Early last week, the UK pensions regulator published new guidance notes detailing the postponement of transfers not only to QROPS but also to the international self-invested pensions known as SIPPS.

Employers typically provide workers with defined benefit pensions, with retirement savers given a statutory right to ask for a transfer value in order to make a suitable decision. The regulator’s new guidance notice isn’t actually legally binding, meaning retirement savers can still complain to the UK Ombudsman should the process be taking longer than usual. However, the former British pensions minister told the media a number of illiquid assets aren’t trading as normal in the present crisis, meaning valuations could well be unreliable.

Calling the scheme a practical and sensible solution to these unstable economic times, the minister told reporters concerns exist over those transferring savings out of their DB schemes as regards the damage to their own finances and the future of the scheme itself. She added the risk of falling foul of pension scammers and cold-calling crooks is relatively high at present, as the markets are in turmoil and more elderly workers are confined at home or have lost their jobs.