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Industry Group publishes Code of Good Practice on Incentive Exercises

A Code of Good Practice on Incentivised Transfer Exercises (ITE) was today published by the Industry Working Group on Incentive Exercises. Developed by a wide group of industry representatives, the Code aims to improve the standard of ITEs and improve the protection of pension scheme members taking part in ITEs.

The Code has been developed in response to a call by the Pensions Minister, Steve Webb to improve the standard of ITEs for pensions to stamp out industry bad practice.

Steve Gay, Director of Life, Savings and Protection, ABI comments:
We must protect people from making pensions choices contrary to their long term interests. Where employees are offered to transfer out of their defined benefit scheme, the offer must be transparent without cash incentives likely to distort people’s choices. The ABI and its members fully support the Industry Working Group’s Code of Good Practice on Incentive Exercises. The Code will substantially improve the protection of pension scheme members taking part or considering taking part in Incentivised Transfers. The ABI expects all its pension providers to comply with all principles within the Code that are relevant to their business, and only transact transfer business undertaken in compliance with the Code of Good Practice. The ABI will continue to work with members and the Industry Working Group to support the development of the ownership, maintenance and monitoring of the Code”.

Minister for Pensions, Steve Webb comments:
“Whilst it is understandable that firms need to manage their pension liabilities this must be done in a way that enables scheme members to make informed choices about their pensions. The practice of offering cash incentives for people to give up valuable salary-related pension rights was a source of particular concern. I therefore very much welcome the work that has been done to come up with an industry Code to stamp out bad practice. This new Code of Practice must be adopted as the standard for all transfer exercises in the future, without exception”.

Joanne Segars, Chief Executive of the NAPF, comments:
“This code of practice will help to ensure people take the right decisions for their retirement. The industry has worked together to take this action and we think it will help protect savers and pensioners.
“This code sets a clear and fair standard. The NAPF strongly supports it and we will help to monitor compliance.
“This is a code of practice, not a detailed and prescriptive handbook. It is crucial that everyone complies with the spirit of the code, not just with its specific recommendations. The industry must also realise that if the code doesn’t work then regulation is likely to be the next step – and that is something it should try to avoid.”

Margaret Snowdon, Chair of the Industry Working Group, comments:
“This code has been designed by industry experts to improve the protection for pension scheme members involved in incentive exercises. The principles of the code will ensure that that good practice becomes the norm rather than the exception and it will help to restore confidence in incentive exercises as a legitimate liability management tool.

Alan Howard, a spokesperson for the Institute and Faculty of Actuaries comments: “We are pleased to have played a key role in the development of the Code. It represents a practical step forward for those involved in pensions and, if widely adopted, will lead to better outcomes for individuals who are offered transfers from final salary schemes."

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Notes for Editors
1. Enquiries to:
Malcolm Tarling 020 7216 7410 Mobile: 07776 147 667
Linsey White 020 7216 7415 Mobile: 07885 998011 Sarah Bailey 020 7216 7514 Mobile: 07725 372636 Adeola Ajayi 020 7216 7521 Mobile: 07725 245284

Christian Zarro, Press Officer, NAPF, 020 7601 1718 or 07825 171 446, christian.zarro@napf.co.uk

2. The ABI is the voice of the UK’s insurance, investment and long-term savings industry. It has over 300 members, which together account for around 90% of premiums in the UK domestic market.

The ABI’s role is to:

  • Be the voice of the UK insurance industry, leading debate and speaking up for insurers.
  • Represent the UK insurance industry to government, regulators and policy makers in the UK, EU and internationally, driving effective public policy and regulation.
  • Advocate high standards of customer service within the industry and provide useful information to the public about insurance.
  • Promote the benefits of insurance to the government, regulators, policy makers and the public.
The UK insurance industry is the third largest in the world and the largest in Europe. It is a vital part of the UK economy, managing investments amounting to 26% of the UK’s net worth and contributing the fourth highest corporation tax of any sector. Employing over 290,000 people in the UK alone, the insurance industry is also one of this country’s major exporters, with 28% of its net premium income coming from overseas business.

Insurance and businesses protect themselves against the everyday risks they face, enabling people to own their own homes, travel overseas, provide for a financially secure future and run businesses. Insurance underpins a healthy and prosperous society, enabling businesses and individuals to thrive, safe in the knowledge that problems can be handled and risks carefully managed. Every day, our members pay out £147 million in benefits to pensioners and long-term savers as well as £60 million in general insurance claims.

3. An ISDN line is available for broadcasts.

4. More news and information from the ABI is available on our web site, www.abi.org.uk.

5. About the NAPF: The NAPF is the leading voice of workplace pensions in the UK. We speak for 1,200 pension schemes with some 15 million members and assets of around £800 billion. NAPF members also include over 400 businesses providing essential services to the pensions sector.

Last updated 01/07/2016