Chapter 5 Key Issues Relating To Pension Transfers Flashcards

Question

PPF; Moral Hazard

Answer 1

“Examples of a moral hazard issue are where the employer agrees that a senior member of the board can retire due to ill-health on a generous pension shortly before the company goes into liquidation, or where discretionary increases to pensions in payment are made to some members shortly before the company goes into liquidation. In these instances the PPF may view these actions as an attempt by the employer to benefit certain members over others and regard the benefits these members received to be excessive, placing too much strain on the resources of the PPF to continue paying them at that level.”

Answer 2

“In most cases, once a scheme is in the assessment period the trustees are not in a position to pay out any transfer values. There may be an exception to this where the member: requested and accepted the transfer value in writing before the assessment date (and also within the timescale set by the trustees in order that the CETV quoted is still valid); and has designated a scheme willing to accept that transfer value (i.e. have completed all paperwork required by the scheme the funds are to be transferred to and have submitted these). In these cases the trustees may only pay the transfer value if they: are satisfied that they can still meet their objective of ensuring that protected liabilities do not exceed assets (or that where they do, the excess is kept to a minimum); and reduce the transfer payment to ensure that it does not exceed the cost of securing the benefits that would be payable if the PPF were to assume responsibility.” “Once the PPF has assumed responsibility for the scheme, a member is not entitled to a transfer payment, unless their pensionable service was ended by the start of the assessment period and they had less than three months’ pensionable service in the scheme. Insufficient assets An S143 valuation is carried out to determine whether there are insufficient assets within the scheme. This valuation is based on the theoretical cost of buying out the scheme’s benefits with an insurance company and the provision of the PPF compensation entitlement to each member.”

Answer 3

“Type of member/condition Benefits provided Members who have already reached the scheme’s normal retirement age when the employer suffers an insolvency event 100% Members already in receipt of a survivor’s benefit at the point the employer suffers an insolvency event 100% Members who have retired but have yet to reach the scheme’s normal retirement age when the employer suffers an insolvency event 90%: subject to an overall cap of £39,006.18 (2018/19) at age 65 (i.e. a maximum compensation payment of £35,105.56 p.a.). The cap is reduced in line with member’s age at the time of payment if they are under age 65. Members who defer receiving their compensation until after age 65, will have the cap increased. Deferred members who have not reached the scheme’s normal retirement age when the employer suffers an insolvency event As above. Note: deferred members can choose to take their compensation later than the scheme’s normal retirement age and if they do so, their compensation is actuarially adjusted to reflect the period of postponement. Survivors’ benefits for a spouse/civil partner/relevant partner coming into payment after the employer suffers an insolvency event (but see below) 50% of the member’s PPF entitlement[…]” “Survivors’ benefits for qualifying children (where a spouse’s pension is also paid) coming into payment after the employer suffers an insolvency event One qualifying child will receive 25% of the member’s PPF entitlement, increasing to a maximum of 50% if there is more than one qualifying child. Survivors’ benefits for qualifying children (where there is no spouse’s pension paid) coming into payment after the employer suffers an insolvency event One qualifying child will receive 50% of the member’s PPF entitlement, increasing to a maximum of 100% if there is more than one qualifying child. Members already in receipt of a pension on the grounds of ill-health when the employer suffers an insolvency event Up to 100%, but reviewed on a case-by-case basis.”

Answer 4

“Payment of spouse/civil partner/relevant partner benefits Although the PPF includes a provision for a 50% spouse/civil partner/relevant partner pension, whether one is paid is determined by the rules of the original scheme.” “Payment of survivor’s benefits to qualifying children A qualifying child is one who is a natural child (either born or unborn at the date of the member’s death), adopted child or a child of the family who was financially dependent upon the member at the time of their death. They must be either under 18 or over 18 and under 23 and: in qualifying education, i.e. attending a full-time educational or vocational course at a recognised educational establishment; or have a qualifying disability, i.e. be incapable of engaging in full-time paid employment due to a condition defined as a disability under the Disability Discrimination Act 1995.” “Application of the compensation cap The Pensions Act 2014, schedule 20, included provisions to increase the cap for those with pensionable service over 20 years by 3% for every additional full year. From 6 April 2017, the ‘long service cap’ came into effect for members who have 21 or more years’ service in their scheme. For these members the cap is increased by 3% for each full year of pensionable service above 20 years, up to a maximum of double the standard cap.”

Answer 5

“Deferred members of schemes within the PPF have their benefits revalued thus: Benefits for service accrued prior to 6 April 2009 Increased each year in line with the CPI subject to a maximum of 5% Benefits for service accrued after 5 April 2009 Increased each year in line with the CPI subject to a maximum of 2.5% Once members start to receive their compensation their payments are increased thus: Benefits accrued for service prior to 6 April 1997 No increases Benefits accrued for service after 5 April 1997 Increased in line with CPI to a maximum of 2.5%”

Answer 6

“The pension flexibilities do not apply to the PPF. A PPF trivial commutation lump sum can, however, be paid in respect of PPF compensation once the scheme has” “been transferred and where the member: has a minimum age of 55; is under age 75; and has £30,000 maximum overall benefits. A twelve month ‘window’ applies (from the first trivial commutation payment) during which any schemes being commuted must be completed.”

Answer 7

“The Financial Assistance Scheme (FAS) is designed to assist those who had lost pension benefits through company insolvency but are not covered by the PPF. In order for a scheme to be considered under the FAS rules the scheme must not be a money purchase scheme, and must meet the following conditions: The winding up process began between 1 January 1997 and 5 April 2005. It began winding up after 5 April 2005 but is ineligible for help from the PPF due to the employer becoming insolvent before this date. It began winding up between 23 December 2008 and 28 March 2014. It is winding up underfunded due to an insolvency event which occurred before 6 April 2005. The relevant employer had ceased to be an employer in relation to the scheme prior to 10 June 2011.” “The FAS will pay up to 90% of the pension the member had accrued before the scheme started to wind up. The compensation is a top-up to any pension that the scheme itself will pay, subject to an overall maximum. At the time of writing (March 2018) the cap that applies to those whose entitlement begins between 1 April 2017 and 31 March 2018, is £34,229 p.a. The cap is revalued annually in line with increases in the CPI. Given the level of CPI over the previous twelve months, it may be that the cap is not increased. Different caps apply depending upon the date entitlement starts. With effect from 6 April 2018, the same ‘long service increase’ will apply to the FAS as applies to the PPF, allowing those with more than 20 years’ service to benefit from higher than the standard capped amount. Payments received under the FAS will increase each year in line with increases in the CPI to a maximum of 2.5% p.a. for service from 6 April 1997 only. A surviving spouse/civil partner is usually entitled to 50% of the amount that the member was receiving or would have received. “FAS payments to scheme members are made from the later of the scheme’s normal retirement age (NRA), subject to a lower age limit of 60, or from 14 May 2004. It may be possible for payments to start before the member’s NRA if the member is unable to work due to ill-health and is likely to remain so until NRA. Payments to members who are terminally ill can start at any age. From the date the scheme winds up until the date the member reaches NRA, the member’s benefit must be increased in line with scheme rules: Benefits accrued before 30 March 2011 will be increased at RPI to a maximum of 5%. Benefits accrued from 31 March 2011 will be increased at CPI to a maximum of 5%.”

Answer 8

“An individual with primary protection who gets divorced after 5 April 2006 may find that it affects their protection. If an individual is subject to a pension debit after 5 April 2006, their primary protection factor has to be recalculated as at 5 April 2006. This is done by taking the value of the pension debit rights away from the original benefit value on 5 April 2006 and recalculating the primary protection factor using the lower benefit value.” “If the reduced value as at 5 April 2006 is lower than £1.5m then primary protection is lost. This is the only way that an individual can lose primary protection.” “A pension credit may also have an impact if the recipient (i.e. the ex-spouse) has enhanced protection. If the ex-spouse has enhanced protection they may lose this as a result of receiving the pension credit. Whether or not this occurs depends on how the pension credit is received: Destination of transfer Effect on enhanced protection New pension arrangement Enhanced protection is lost due to the setting up of the new arrangement, because the transfer of a pension credit is not a permitted transfer. Existing money purchase arrangement Enhanced protection is not lost, because the transfer is not deemed to be a relevant contribution. Existing defined benefit scheme or cash balance plan Enhanced protection may be lost at a later stage if relevant benefit accrual occurs.”

Answer 9

“Under offsetting the value of the pension is ‘offset’ against the other assets of the marriage. The ex-spouse would therefore receive a greater share of the balance of the assets in return for the loss of their ‘share’ of the member’s pension. The theory of offsetting works as follows: The pension benefits are valued as an immediate asset, i.e. the pension is given a lump sum value in today’s terms. This value is then taken into account when the assets and liabilities of each spouse are considered. The ‘offset’ could be accounted for by way of physical assets or by providing some form of income, e.g. the ex-spouse could receive additional maintenance or income or deferred maintenance or a deferred lump sum.” “Offset is made at the time of the divorce. Therefore, neither the death or remarriage of the member, nor the death or remarriage of the ex-spouse have any effect. However, if a death in service nomination was still in favour of an ex-spouse who remarries, the member may request that this now be overturned.” “DB schemes The CETV is used to establish the gross value of the member’s accrued benefits (see CETV calculation in Guaranteed CETV statement of entitlement). For DB schemes, the following is taken into account when determining the amount of ‘offset’: The ex-spouse will no longer gain any benefit from the pension and tax-free lump sum once they come into payment. The ex-spouse will no longer receive a spouse’s pension if the member predeceases them. The loss of death-in-service benefit. These benefits are paid at the discretion of the trustees and so the ex-spouse would not automatically have received this payment if they had remained married.” “Money purchase schemes With a money purchase scheme the loss to the ex-spouse is determined by agreeing a percentage or proportionate division of the fund value, taking the following into account. Loss of pension benefits: The value to the ex-spouse is calculated in the same way as for a pension transfer – the value is based on the cost of buying the benefits accrued to date. It takes into account the possibility that the member may die before retirement. Loss of spouse’s pension: Calculated in a similar way as the pension, and mortality tables are used to determine the life expectancy of the member and the ex-spouse. Loss of death-in-service lump sum: Death in service benefits are only paid if the member’s death occurs before they take their pension benefits from the scheme. It is not certain that any benefits would have been paid to the ex-spouse as their payment is at the discretion of the scheme trustees who take into account the marital status of the member, the financial dependency of the ex-spouse on the deceased and any expression of wish completed by the”

Answer 10

“Under an earmarking award, the member retains ‘ownership’ of the whole pension fund. The earmarking award simply allows the court to direct the pension provider to pay some of the benefits to the member’s ex-spouse. There are two types of earmarking order: Earmarked periodic payment orders Earmarked lump-sum orders The court makes an order against the pension scheme requiring the scheme to pay part of the member’s pension to the member’s former spouse. As a result: the payment to the ex-spouse will commence when the member starts to take their own benefits; the payment to the member is reduced accordingly; the order is expressed as a percentage of the member’s pension; and a separate order is required for each pension arrangement held by the member. The court makes an order to the pension scheme requiring part or all of the member’s tax-free lump sum to be paid to a former spouse. As a result: the payment is made when the member comes to draw their retirement benefits; and the lump sum may be in addition to the pension, or in return for a reduced pension.” “Drawbacks of earmarking The benefits earmarked for the ex-spouse do not become payable until the member secures their benefits. The courts have no power to set a date by which the member must take their benefits (i.e. age 65) and if the member does defer taking the benefits, which they can do to any age, even beyond age 75, this can have a significant impact on the value of the earmarking order to the ex-spouse. Pension benefits with earmarking orders attached to them may be transferred from one scheme to another. The ex-spouse has no control over this – it is entirely the member’s decision. Where all the benefits are transferred, the ex-spouse is notified by the original scheme so that they can apply for a variation of the original order. However, where only part of the benefits is transferred the order does not transfer to the new scheme and the ex-spouse can only claim against the original scheme. This means they must claim the balance owed from the member. It is easy for the ex-spouse to lose track of the earmarking order, particularly if they change address, because the scheme is only required to write to them at the last known address. The ex-spouse has no control over the member’s investment decisions. This means that the member could invest their funds in a manner contrary to their ex-spouse’s attitude to risk.” “The use of an earmarking award can lead to issues upon death or re-marriage: Member dies Earmarked periodic payment order ends and ex-spouse loses the benefit, whether death occurs before payment starts or once it has commenced. The lump-sum order can theoretically survive the death of the member, but it is often not possible for this benefit to be paid out, i.e. if the scheme in question is a defined benefit scheme. If the death-in-service benefits are earmarked these will be paid out on the member’s death providing this happens before they have taken their benefits. Ex-spouse dies Order for periodic payment will cease – there is no value to their estate. Lump-sum order may remain and will be payable to the ex-spouse’s estate, but only when the member draws their benefits. Member remarries The earmarking order continues. Ex-spouse remarries Any earmarked period payment order no longer has any legal standing, although the lump sum order remains in place. Thus, where remarriage of the ex-spouse is a possibility, earmarking the lump sum is preferred to earmarking the pension. Even cohabitation can lead to the member seeking, and possibly gaining, a varying order in the courts. “Impact on the lifetime allowance Earmarking has no direct impact on either the member or the ex-spouse’s lifetime allowance (LTA) as the pension benefits remain in the ownership of the member, i.e. neither will have an adjustment made to their LTA. However, an earmarking award can have an indirect impact. The member will have a lower pension income in retirement but, because they still own all the pension rights, these rights, including the income and/or lump sum paid to their ex-spouse, will be valued against their lifetime allowance. Where a member has pension rights valued at close to the LTA this gives them no scope to fund a pension to replace this income without risking a lifetime allowance tax charge. The ex-spouse will receive a pension income that is not valued against their lifetime allowance, so they can fund pensions of their own to the value of the LTA plus receive the benefits under the earmarking, without paying a lifetime allowance tax charge”

Answer 11

“Pension sharing divides the scheme member’s pension rights at the time of divorce: The split is not necessarily 50/50. The ex-spouse may be entitled to a transfer value and/or membership of the member’s pension scheme. The rights allocated to the ex-spouse are known as a pension credit if paid from uncrystallised funds, and as a disqualifying pension credit if this is paid from crystallised funds.” “The following pension rights cannot be shared: ``` New State Pension. Basic State Pension. Graduated Retirement Benefit (GRB). A widow(er)’s pension in payment. The following pension rights can be shared: ``` Protected payments paid in addition to an individual’s entitlement to the new State Pension. SERPS and S2P (although these have ceased to exist other than for individuals who had attained their SPA on or before 5 April 2016). Occupational schemes, including AVCs. Registered individual schemes (i.e. personal pensions, stakeholder pensions, retirement annuity contracts and S32 policies). Statutory schemes (i.e. public sector).” Funded MP Scheme: “The courts will award a percentage share of the money purchase fund, e.g. 30% of a £100,000 fund would result in £30,000 of the fund being ‘given’ to the ex-spouse. This can lead to one of two outcomes: The ex-spouse could transfer their £30,000 to their own occupational scheme or to a personal pension. The original scheme can, but does not have to, offer the ex-spouse membership, so that the value is retained within the member’s scheme, but in the ex-spouse’s name.” “Funded defined benefit schemes The award is based on a percentage of the CETV at the date of the pension sharing order.” “Unfunded schemes These are defined benefit pension schemes that do not have a pension fund and so retired members’ benefits are, technically, paid from current member contributions. These schemes include public sector schemes, such as the Civil Service scheme. For these schemes, pension sharing works differently from a funded defined benefit scheme as the absence of a fund means that they do not offer a transfer value to the ex-spouse, but rather offer shadow membership of the scheme, i.e. the ex-spouse is granted their own membership of the scheme separate from the member they are divorcing.” “Advantages of pension sharing Advantages to the member: They potentially lose less value than if offset or earmarking orders had been used. It provides immediate settlement and a clean break. There are no income tax implications for the member, so a lower gross value can be given up. Advantages for the ex-spouse: Benefits cannot be forfeited in the event of either party’s death. There is no risk on remarriage or cohabitation. It provides immediate settlement and a clean break.” “Impact on the lifetime allowance The ex-spouse was able to apply for an increase in their LTA to offset the pension credit. Where the ex-spouse applied for primary protection, there was no need to make a separate claim for the pension credit, as it was taken into account in calculating their primary protection factor. Any pension debit from a pension sharing order effected before A-Day was ignored”

Answer 12

“A qualifying recognised overseas pension schemes (QROPS) is an overseas pension scheme that meets certain requirements set by HMRC and that has agreed to the HMRC reporting requirements concerning the payment of benefits. They are mainly of use to people who are planning to emigrate, or have emigrated, from the UK or are planning to leave the UK to return to their home country, as a QROPS can receive the transfer of UK pension benefits without the member incurring unauthorised payment and scheme sanction charges. A QROPS may also be of use to anyone planning to work or live overseas, or who is married to, or in a civil partnership with, someone from another country, although care is now required where the transfer is made without a ‘genuine need’. This genuine need is deemed to be met where: both the individual and the scheme are within the European Economic Area (EEA); if outside the EEA, both the individual and the scheme are in the same country; or the QROPS is an occupational pension scheme provided by the transferor’s employer.” “The requirements to be a ROPS also changed again when in the March 2017 Budget the Chancellor of the Exchequer announced that pension transfers to QROPS which were requested on or after 9 March 2017 could be subject to an overseas transfer charge of 25% on the value of the pension transfer. Individuals who transferred a UK pension to a QROPS before 9 March 2017, will not be affected by the overseas transfer charge. The overseas transfer charge was introduced to deter people transferring pensions out of the UK for purely UK tax avoidance reasons and is designed to ensure that if a QROPS goes ahead, any potential lost tax revenue is recouped by the Government when the transfer is made.” “A QROPS has to report to HMRC about the payment of benefits for at least ten years from the date of transfer. However, once the member has been non-UK resident for five complete tax years, they may then benefit from options that are more attractive than those permitted under a UK scheme.” “HMRC requirements A transfer of pension funds from a UK registered pension scheme to a QROPS is a benefit crystallisation event (BCE) under BCE 8. If the transfer exceeds the member’s available lifetime allowance, a lifetime allowance charge at the rate of 25% will apply to the excess before the funds are transferred (the rate is at 25% and not 55% because no lump sum is physically received by the member). The lifetime allowance charge is in addition to any liability that may arise to the Overseas Transfer Charge.” TAX IMPLICATIONS: “The member tax charges are levied at the same level as the unauthorised payments tax charge (40%) and surcharge (15%) and are levied on the member regardless of where they are resident at the time of the payment or transfer. They also apply where a QROPS pays what would be a UFPLS under a Registered UK Pension Scheme. The overseas scheme may lose its QROPS status, preventing acceptance of any further UK pension fund transfers.” REGULATORY CONSIDERATIONS: “The scheme administrator of a QROPS must notify HMRC that the scheme meets the conditions to be a recognised overseas pension scheme every five years. When the new rules came into force on 6 April 2015 the re-notification deadline was delayed until 6 April 2016.” TEMPORARY NON-RESIDENCE: “Where such an individual takes benefits from a RNUKS during their period of non-residence, the pension received is only taxed in the UK upon the member’s return if the relevant withdrawals taken during that time, from both registered pension schemes and RNUKS, total more than £100,000. This excludes any tax-free entitlement such as a pension commencement lump sum (PCLS) or the tax-free part of an UFPLS. This is because tax will already have been paid in the country of residence when the benefits were taken from a RNUKS and this ensures that there is no additional income tax liability on return to the UK.”

Answer 13

“Attitude to risk is the extent to which a client is willing to accept risk with their investments in return for the potential of a higher return. Capacity for loss is a distinct but related concept. If someone has no capacity for loss, then it does not matter how cautious or adventurous they are because they simply cannot afford to put any of their capital at risk. The FCA defines capacity for loss as: the customer’s ability to absorb falls in the value of their investment. If any loss of capital would have a materially detrimental effect on their standard of living, this should be taken into account in assessing the risk that they are able to take.” “Timescale A period of 20 or more years to retirement generally allows most clients to regard short-term fluctuations in investment values with some equanimity, thus allowing them to take the level of risk required to potentially achieve higher long-term returns. As the client gets nearer to retirement the importance of reducing short-term fluctuations becomes greater and investment attitudes and strategy should be adjusted accordingly. Wealth If the pension is a relatively small proportion of a client’s overall invested wealth, the client may be prepared to take a higher risk approach. Someone who expects their pension to be their only source of retirement income is likely to be more cautious. Past experience Someone with a personal or family history of equity investment is likely to understand the basics of equity investment and the risks. Someone with no background of taking either investment or business risks may find equity investment uncomfortable. Other investments A client may have a different attitude to risk with regard to pensions from their other investments. A person may be risk-averse with respect to their pension funds but prepared to speculate with a personally owned lump sum.”

Answer 14

“If available, the scheme may allow a member to transfer a proportion of their benefits out of the scheme and retain some benefits in the scheme. This is will be in relation to the different elements of pension accrued such as guaranteed minimum pension (GMP), pre-97 excess and post-97 excess. Which parts to retain and which elements to transfer will depend on the individual benefit entitlements with each element of the pension.”

Answer 15

“Under some of the pre-A-Day regimes, it was possible to accrue a tax-free cash lump sum that exceeded 25% of the value of the member’s benefits as at 5 April 2006. This scenario was most likely to apply to individuals who joined their occupational pension scheme before 17 March 1987 when benefits were subject to a very generous set of rules (known as the pre-87 regime). The rules for those in this situation, whose benefits are valued below the LTA, are as follows: Such individuals can protect their enhanced PCLS entitlement without applying to HMRC. The onus falls on the existing scheme, which has to record the member’s entitlement to PCLS on an ongoing basis. However, if benefits are transferred after A-Day, the higher PCLS is lost, unless the transfer is part of a block transfer. There are effectively two sub-types of block transfer: a ‘buddy’ transfer with another member; and a transfer to a section 32 (S32) plan in connection with winding up a scheme (s32 plans are also referred to as trustee buyout plans or deferred annuity contracts) and a further onward transfer to another s32.” “It is also possible for a member to have a protected pension age allowing them to take their benefits before the normal minimum pension age of 55. This right would also be lost on transfer unless as part of a block transfer.”

Answer 16

“Advisers whose clients are in drawdown will find cash flow modelling particularly important. This is because drawdown involves more risks than a pension fund in the accumulation phase. The usual investment risks are amplified because withdrawals are being taken from the fund and often these withdrawals are higher than the level of the ‘natural’ income (i.e. dividends, interest etc.) achieved by the fund” “The main risks in retirement are that the client’s capital and income fail to provide enough to meet their wants and needs. This could happen because, for example: Their income and/or capital suffers irrecoverable reductions in value because of some investment loss. The client’s income/capital needs are greater than expected, perhaps because of illness or some other major change in circumstances. The real value of their income or capital is eroded by inflation. The client lives longer than expected and runs out of resources. Future returns are lower than expected.” “Any cash flow model used should demonstrate how the portfolio might perform in a downturn or in various other scenarios. This can be termed a ‘stress test’ for the client: for example, could they cope if their capital ran out completely, or could they manage on a lower income during the downturn to ensure that the capital is not depleted too much? It is also important to bring potential changes in inflation into the stress test and build in a sufficient buffer to cover unexpected expenditure.” “A cash flow model must take into account the effects of inflation as, even at low levels, inflation can have a significant effect on living standards over time. Over 20 years the impact of rising prices on a fixed income (such as a level annuity) is as follows: Annual inflation rate Reduction in real income 2% one-third 3.5% one-half 5% two-thirds” “The advice will be based on inflation assumptions, which are likely to change over the client’s lifetime. It is important therefore to consider how the plan will stand up to potential changes in the future to help the client understand the degree of risk they are taking on.” “Major market loss One of the most important factors to consider is the impact that poor investment performance will have on advice, as the client’s ultimate benefits will rely on this.” “Monte Carlo simulations These are used to model the probability of different outcomes in a process that cannot easily be predicted due to the intervention of random variables. This makes it ideally suited for financial planning where projections are based on a number of variables all which could impact on the outcome. This is particularly useful for stress testing cashflow models that are used in conjunction with direct benefit pension transfer advice. Named after the gambling hot spot in Monaco, as chance and random outcomes are central to the modelling technique, much as they are to games like roulette, dice and slot machines. The technique was first developed by Stanislaw Ulam, a mathematician who worked on the Manhattan Project.” “A typical Monte Carlo simulation calculates the model hundreds or thousands of times, each time using different randomly-selected values. When the simulation is complete, we have a large number of results from the model, each based on random input values. These results are used to describe the likelihood, or probability, of reaching various results in the model.” EARLY/LATE MORTALITY: “Consideration should be given to the income available to any surviving financial dependants in the event of early mortality. This could include the following: For accumulation clients, this should consider the situation both pre- and post-retirement and take into account all benefits available on death, such as death in service (DIS), life insurance and investments, that would be inherited. This should be considered in terms of the benefits available from the scheme and on transfer to an alternative contract. For those at retirement, the focus would be on the benefits available to the survivor, again both retaining the benefits in the scheme and transferring to an alternative scheme. Late mortality presents a different problem, that is the potential to run out of money. It is important to ensure that at least the basic income can be sustained at standard mortality and longer life expectations.”