The government should overhaul defined (DB) pension rules to make partial transfers easier, according to Royal London director of policy Steve Webb.
Webb (pictured) will make his case in a response to a Department for Work and Pensions (DWP) green paper on DB pensions published yesterday.
The green paper set out questions on how to deal with increasing pressure on DB schemes. Proposals in the paper included allowing more flexibility on index link promises made by distressed employers, and the creation of a voluntary superfund for smaller schemes to consolidate.
However the paper did not mention partial DB transfers, despite some figures pushing this concept in recent months.
Partial transfers allow members to transfer out a certain percentage of their benefits to a defined contribution scheme. Although they are allowed for by regulation, trustees often do not accept them because of administration costs.
Webb has said the issue was ‘sufficiently valuable’ to merit its own mini-consultation later in the year.
‘I think for me partial transfers are a potential win-win; schemes can de-risk, members get new choices and the Treasury probably gets an extra pound or two,’ the former pensions minister said.
‘From a regulation point of view, advisers are terrified of a full transfer because it is all or nothing - you get a big DB transfer wrong and that is an awful lot of someone’s retirement income, but if it is partial you have a guaranteed income and it is much less all or nothing.’
Webb said although there was no mention of the partial transfers in the paper, he thought
Royal London's rival pension provider Aegon has also made a case for partial DB transfers.