‘Ban final salary pension transfers during epidemic’

Pension savers who request the value of their final salary pension could be given “significantly inaccurate” figures as a result of market turbulence, experts have warned.

Baroness Altmann, the former pensions minister, called for a temporary ban on all transfers out of final salary or “defined benefit” pension schemes, warning that any valuations would be “unreliable”.

She said: “In the current market turmoil, it is impossible for trustees of pension schemes to be sure of the underlying value of a pension.”

Keir O’Donnell of Cartwright, an actuarial firm, said the problem was that transfer values were guaranteed for three months but likely to be out of date by the end of that period owing to coronavirus-related market swings.

For every 0.5 percentage point change in the yield on bonds issued by the Government ( gilts), transfer values could change by 10pc-15pc, said Mr O’Donnell. Over recent weeks such movements have happened within a day, he warned.

However, James Baxter of Tideway Investment Group, a financial advice firm, said a ban on transfers would be an “overreaction” and “ill-informed”. It is in the best interest of some people to transfer and invest in a market where stocks are cheap, he said.

Steven Cameron of Aegon, the pension firm, said that he was not surprised that there had been calls to suspend transfers but that it could have a “detrimental” impact on members who planned to transfer to draw more flexible pensions.

“Individuals have a statutory right to transfer, so halting it cannot be done lightly,” he said.