Arguments against a general DB transfer restriction, but calls for a moratorium on public sector transfers. In its response to the ‘freedom and choice in pensions’ consultation, Capita Employee Benefits suggests members of private defined benefit (DB) schemes be allowed to transfer into defined contribution (DC) schemes.  

Mark Evans, head of corporate consulting for Capita Employee Benefits, commented: “Next year, people in a DC pension scheme will have far greater choice as to how they take their retirement savings. However, the same choices won’t be available to those in DB schemes and current proposals mean DB scheme members will not be able to move into a DC scheme in order to take advantage of the changes. “This seems a little unfair on DB scheme members. It’s also worth considering the fact that DB members have had a longstanding right to a cash equivalent transfer value (CETV) that will be difficult to remove. 

“A further consideration should be the impact restrictions will have on de-risking projects. Currently, many DB schemes are looking to de-risk and transferring members into DC or hybrid scheme is an attractive option. If transfers are to stop, then we may see many de-risking projects put in jeopardy. However, the cost on the public purse for those in unfunded public sector DB schemes looking to transfer and take advantage of the new drawdown option could be prohibitive. To guard against this, we suggest a moratorium for public sector transfers, but for private companies with a DB scheme transfer restrictions needn’t be in place.”