Pensions Transfers

The Commission became the regulator of pensions in Guernsey at the request of the States of Guernsey in June 2017. Since that time it has gathered and analysed information from pension providers as part of its regulatory oversight function. This work helped inform the Commission’s initial review of pension regulations which it conducted between 1 December 2017 and 28 February 2018. Following this review the Commission determined that it was appropriate to introduce some new rules for pension providers to improve the initial pension regulation rules. It consulted on these proposed new rules between 12 September 2019 and 7 November 2019 and published the final rules on 18 February 2020. These new rules come into force on 31 December 2020. They include rules which state explicitly:

• “Licensees must pay due regard to the interests of Scheme Members and beneficiaries and treat them fairly. (2.1)…
• Transfer requests and information about transfer values should be processed promptly and accurately and should not be unreasonably delayed.
• Licensees must not impose unreasonable conditions on Scheme Members who request a transfer (2.12).”

All pensions providers are obliged to abide by these rules once they come into force and the Commission encourages all pension providers to take heed of them during the remainder of 2020. Individual complaints about pensions will normally be considered by the Channel Islands Financial Ombudsman who generally has powers to award compensation1. The Commission would generally become involved if it was clear that there were consumer treatment issues which the Ombudsman was not best placed to deal with through adjudication on individual cases.

Pension transfers are not necessarily straightforward and Guernsey pensions providers, to the extent they act as the trustees of the pension funds (which will often be the case), have an obligation to ensure that they are acting in the best interests of the beneficiaries of the trust – the pension scheme members. They are entitled to question a request for a transfer where they are concerned, inter alia, that the request may arise because of a financial adviser (resident in Guernsey or overseas) manipulating a pension scheme member in the hope of churning the member’s pension to make a significant short term profit at considerable cost to the scheme member’s pension. That said, there must be a balance to such scrutiny by Guernsey pension trustees and in cases where the trustee has no reason to believe that the scheme member is not of sound mind, having appropriately checked the pension member’s rationale for the transfer and the bona fides of the new trustee2, they should respect that individual’s reasonable expectation of being able to freely choose where and how to conduct his or her pensions saving and effect a transfer without undue delay, unreasonable charges or conditions in relation to the transfer. They cannot unreasonably substitute their judgement as to the pension member’s best interests save in unusual circumstances as we live in a free society. They must also take care not to privilege their commercial interests over their fiduciary duties under the trust law and their legal obligations to adhere to Bailiwick pension regulations.

1 See https://www.ci-fo.org/wp-content/uploads/wpallimport/files/CS16-000223.pdf  as an example of an adjudication
2 Please see p. 29 of https://www.gfsc.gg/sites/default/files/The%20Pension%20Rules%20and%20Guidance%202020.pdf for fuller guidance on transfers
Also see: https://vimeo.com/475890156