According to Scottish Equitable, employers are offering cash-in-hand payments as incentives for people to leave company pension schemes. They have said that they have seen one case where a member with benefits equalling £79,000, had been offered £23,000 to leave the company scheme. The provider believe that finance directors were using the tactic to reduce company scheme liabilities, by offering members transfer values that could be higher than the level the scheme could afford to fund, but lower than an individuals full benefits. The Pensions Regulator has said that it is not illegal for members to transfer out in this way, but that certain standards need to be met, and have warned trustees that they are now required to whistle blow any practices they have doubts about.
Our view
Is this a surprise given that company pension funds are so expensive to run?