The Pensions Regulator has written to 14 pension schemes so far this year encouraging trustees to consider cutting the transfer values on offer when workers transfer out of the pension scheme.

The letter, obtained in response to a Freedom of Information request by Royal London, has been sent to several large pension schemes who have been experiencing a large volume of transfers, as part of a drive to protect members from unsuitable transfers and from pension scams. But the letter also raises concerns that if trustees offer overly generous transfer values to those leaving the scheme this could be to the detriment of those left behind.

"In light of recent events concerning your scheme sponsors, we would expect you to take advice from your scheme actuary about whether the basis on which the CETV [transfer value] are calculated remains appropriate… This would allow you to judge whether a reduction of further reduction should be applied to CETVs in light of [an] assessment of covenant strength," the letter said.

If large numbers of members transfer out on generous terms there would be a risk that the funding position of the scheme could worsen and the risk of remaining members not getting their full pensions could increase.

Commenting on the correspondence, Royal London director of policy Steve Webb said: "I would hope that well run pension schemes would be taking expert advice when deciding how much to offer to members wishing to transfer out. But the Regulator’s letter is a helpful reminder to all schemes that they need to be fair not only to those transferring out but also those left behind, especially where the scheme in question is in deficit."

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