The Code is voluntary and relates to exercises where members of defined benefit pension schemes are given an option to change the form of their accrued benefits. This includes some pension increase exchange, transfer or small lump sum options. The Code covers when advice or guidance should be provided and how offers should be communicated.
Stewart Patterson, Head of Liability Management at Willis Towers Watson, said: “I am a strong supporter of the Code of Good Practice on Incentive Exercises and am keen to ensure it continues to lead to well-run exercises. I was very pleased to see that the latest update of the Code has recognised the increasing emphasis on pension fund trustees to take ownership of member choice exercises. I think it is right to have a framework for trustees to be able to reference when offering members choice in a robust, fair and balanced way.
“This is an increasingly important area for pension funds and their members. Pension freedoms have opened up more options for people with defined benefit pensions who are interested in transferring their benefit to access more flexible retirement options. Well run incentive exercises can and should be a legitimate part of the risk management toolkit of pension fund trustees and scheme sponsors, as well as ways for members to access more freedom and choice from their retirement savings.”
Margaret Snowdon OBE, Chair of the IEMB Board, said: “We are delighted to welcome Stewart to our Incentive Exercises Monitoring Board. His direct experience as an industry practitioner will be greatly benefit us as we continue to monitor the effectiveness of incentive exercises.
“The evidence we’ve seen over the last few years shows that the Code of Good Practice on Incentive Exercises is working. The market develops over time and new types of exercises or market practices are being developed all the time. Winding-up lump sums (WULS) are likely to be a consideration for the Board over the next twelve months as we look to ensure these are not being used by schemes in a way that disadvantages members, so it’s great to be able to call on the experience of industry practitioners as part of our Monitoring Board.”
|
