UK - The Pensions Regulator (TPR) has unveiled its final guidance on conducting 'incentive exercises' - including enhanced transfer value exercises (ETVs).

TPR said it had set out principles that would allow employers and trustees to "fully consider the risks" associated with transferring benefits out of defined benefit schemes.

It said trustees should "start from the presumption such exercises and transfers are not in most members' interests" and therefore approach any exercise "cautiously and actively".

It added that members who stood to benefit from such an offer - for personal circumstances, for example - were in the minority.

David Norgrove, chair at TPR, said: "Given the gravity of the decision, the difficult financial equation and potential for detriment if they get the decision wrong, our stance is reasonable and proportionate."

However, Georgina Jones, associate at Sacker & Partners, said: "Although the regulator has acknowledged it might be beneficial for some individuals to accept such an offer, the basic tenor of its guidance remains the same. 

"While the slight softening is helpful, we remain concerned it is not appropriate for trustees to play such a role in what is in fact an offer made by the employer."

In other news, the UK government has launched a public consultation on the discount rate used to set contribution rates in unfunded public service pension schemes.

According to the government, research conducted by the Independent Public Service Pensions Commission indicated that the current discount rate was "at the high end of what is appropriate".

Stuart Southall, chairman of the Association of Consulting Actuaries, said: "Given that it seems there will not be a level playing field in indexation between many private and public sector schemes, it will be particularly interesting to see how the government responds to the likely view from the private sector that the discount rate presently used in respect of unfunded public sector schemes is significantly higher than that which private sector schemes generally use to estimate forward liabilities."

The consultation will close on 3 March 2011.

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