The thematic review by the Guernsey Financial Services Commission covered the major pension providers offering services to some 94% of all members invested in Bailiwick pension schemes.
It said that pension transfers were a regular practice within the local industry, particularly as pension members favour consolidating their pension assets.
But there are several potentially significant risks to scheme members that should be considered when a transfer request is received, risks which could undermine future pension value.
‘Pension transfers are not necessarily straightforward and Guernsey pension providers, trustees and scheme administrators have an obligation to act with due skill, care and diligence to fulfil their responsibilities to the pension scheme members,’ said a spokesman for the commission. ‘This may not always be aligned with pension scheme members’ desires.
‘The commission expects pension providers to take care not to privilege their commercial interests over their fiduciary duties or their legal obligations to adhere to the Bailiwick’s pension regulations.’
It concluded that the current pension transfer requirements are viewed as appropriate.
And respondents to the thematic acknowledged that the requirements within the pension transfers section of the rules and guidance, introduced last year, were appropriate and not unnecessarily onerous.
The commission set out its expectations for pension transfer requests to be completed within 60 days of all relevant information being received, and for requests to be handled promptly, accurately and without unreasonable conditions imposed on scheme members seeking the transfer. Some 95% of all requests were approved and 77% of those took place within the recommended 60 days. Fees for transfers varied, but the market practice is for these to be charged on a fixed-fee basis.
The commission said such fees should be commensurate to the work undertaken and fees should not create a barrier to transfers.
Pension transfers did not result in a large number of complaints, with just 2% of transfer requests resulting in a complaint from the member.