Review of the Pension Transfer Landscape in the Bailiwick - Thematic Review 2021-2022

Summary

This is a thematic review published by the Guernsey Financial Services Commission (GFSC) summarising findings from a 2021 to Q1 2022 review of pension transfer practices in the Bailiwick, covering the period 1 January 2019 to 30 June 2021. It is not new legislation but sets out the Commission's observations, expectations and reminders for licensed pension and gratuity scheme providers, building on the existing Pension Scheme and Gratuity Scheme Rules and Guidance 2021.

• Scope of review: Surveyed the top 12 pension providers (94% of Bailiwick pension members), conducted onsite visits and file reviews at four providers, and met stakeholders including the Channel Islands Financial Ombudsman.
• Key findings: 95.1% of 1192 transfer requests were approved; consolidation of assets was the most common transfer reason; 78% of rejected and 23% of approved transfers took more than 60 days; 68% of transfers were charged a fixed fee.
• Data quality concerns: More than 50% of participating licensees submitted inaccurate or poor quality data during the review, prompting targeted Commission feedback.
• Commission expectations: Licensees must process transfer requests promptly, accurately and without unreasonable delay or conditions, explain delays beyond 60 days, conduct due diligence on receiving schemes, consider transfer-related risks, charge fees commensurate with work performed, and maintain clear documentation of their decision-making.

The review concludes that existing pension transfer requirements in the Rules are viewed as appropriate and not unduly onerous, but reiterates that Trustees and Scheme Administrators must not privilege commercial interests over their fiduciary duties and legal obligations to scheme members.

Key obligations

• Providers must act with due skill, care and diligence when processing pension transfer requests and fulfilling responsibilities to scheme members.
• Providers must process transfer requests promptly, accurately, and without unreasonable delay or unreasonable conditions on Scheme Members.
• If a transfer request is not completed within 60 days from receipt of all reasonable information and documentation, the provider should give the Scheme Member an explanation for the delay.
• Licensees should conduct appropriate due diligence on the transferring and receiving schemes before completing a transfer.
• Licensees must charge transfer fees commensurate with the work undertaken and must not let fees create a barrier to members transferring out of a scheme.
• Licensees must maintain complete documentation recording their consideration and scrutiny of transfer decisions to demonstrate they acted in members' best interests.
• Licensees must submit accurate and timely data to the Commission in response to information requests and thematic reviews.
• Providers must continue to register Schemes with the Commission and submit statistical and annual returns in relation to each Scheme, as required under the Rules.

Applies to

Pension scheme providers, gratuity scheme providers, Trustees, Scheme Administrators, fiduciary licensees regulated under the Regulation of Fiduciaries, Administration Businesses and Company Directors, etc. (Bailiwick of Guernsey) Law 2020

Deadlines

• 60 days from the date the provider received all reasonable information and documentation: If a pension transfer request is not completed within this period, the Scheme Member should be given an explanation for the delay.
• annually as at 30 June each year: Providers submit the annual Form 128 return (which replaced the quarterly Form 126) in relation to each pension or gratuity scheme.