Commentary on Sections Part 4 Pension Flexibilities Section 48: Independent advice in respect of conversions and transfers: Great Britain
199.This section provides that trustees or managers of a pension scheme (in Great Britain) will be required to check that a member or survivor has received appropriate independent advice before converting the member’s or survivor’s safeguarded benefits into flexible benefits, making a transfer payment in respect of safeguarded benefits to a scheme in which the member or survivor will acquire flexible benefits, or paying an uncrystallised funds pension lump sum in respect of safeguarded benefits. Safeguarded benefits mean benefits which are not money purchase or cash balance benefits. Section 48(3) gives the Secretary of State a regulation making power to make exceptions to that requirement. This power is subject to the negative procedure for regulations which create an exception for those who have safeguarded benefits below an amount specified in regulations, but regulations creating any other type of exception are subject to the affirmative procedure. Section 48(2) provides that the regulations can specify what trustees and managers must do to check that a member has received appropriate independent advice, and when the check must be carried out. Trustees or managers who fail to carry out the required check will be liable to civil penalties. Advice is “appropriate independent advice” only if it is given by a person who has permission under the Financial Services and Markets Act 2000 to carry on a regulated activity which has been specified in regulations made by the Secretary of State, and which meets any other requirements specified in regulations.