A new version of the Code of Good Practice on Incentive Exercises for Pensions was today published by the Incentive Exercises Monitoring Board (IEMB).
It is hoped that increased clarity about what represents good pensions practice could allow more freedom and choice to members of defined benefit pension schemes.
The Code was originally launched in 2012, following concerns that members may make poor decisions if offered a cash incentive to transfer out of a DB scheme before retirement, or if they gave up future pension increases without understanding their value.
The Code applies to options not ordinarily available to members, but the IEMB encourages trustees and employers to consider its relevance where options are made available as a matter of course.
“The good standards set out [in the Code] have been embraced by advisers and employers alike, The Code set has set challenging standards that have contributed hugely to improving Incentive Exercises,” the Pensions Minister and the Chair of the IEMB, Baroness Altmann commented.
Most of the changes that have been made to the Code are quite minor – for example, the new version reduces the advice requirements for employers in relation to small pensions and has been reworded to reflect the fact that offers are often instigated by trustees.