The Pensions Regulator is to clamp down on employers offering cash incentives to staff to transfer out of costly final-salary schemes.
The regulator has issued guidelines and warned that directors and trustees could be subject to investigation if they are not followed.
Chief executive Tony Hobman said: “While we recognise that employers may not break any laws when they offer an inducement, whether it is cash payments or an increased transfer value, we are concerned that some transfers are being proposed to avoid an employer’s full pension liability.”
Alongside this, HM Revenue and Customs has announced that cash inducements to opt-out are to be subject to both Income Tax and National Insurance contributions in all cases.
Jane Wolstenholme, pension partner at law firm Wedlake Bell, said: “Employers are being dealt a double blow that will hamper them in using enhanced transfers or cash sweeteners as a way to reduce their pension risks.
“Not only will transferring employees out of final salary schemes in this way become more expensive, it will also become more difficult to put into practice.”
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