New regulations to save UK schemes €14.7m
UK – New regulations published by the department for work and pensions (DWP) are expected to save pension schemes £10m (€14.7m) over the next three years and help employers running smaller schemes to bulk transfer members with protected rights into one single scheme.
The Protected Rights (Transfer Payment) (Amendment) Regulations 2005 are due to come into force on 28 November.
“Through mergers and acquisitions, companies can be in a position where they are administering a number of smaller pension schemes and they may wish to run them as one scheme,” said minister for pensions reform Stephen Timms.
“Where it makes sense for these employers to consolidate their pension schemes into one, it will now be less expensive and time consuming to do so.”
These changes to the Protected Rights (Transfer Payment) Regulations 1996 will mean that protected rights can be transferred in the same way as other pension rights subject to actuarial approval that a member’s rights will broadly be no less favourable, said a DWP press statement.
Protected rights pertain to instances where the government pays a rebate of National Insurance contributions into an individual’s private scheme, where they have contracted out of the State Second Pension (formerly known as SERPS). In a money purchase scheme, pension rights derived from the rebate are known as protected rights.
“These changes are about making it easier for employers to run these schemes which will benefit their members,” commented Timms.
According to a DWP spokesperson, these new regulations had a consulting period between 16 February and 15 April.
‘Industry has been supportive of this measure which will make the administration of pension schemes more straightforward and reduce employer costs, whilst still protecting the members of those schemes,” said Timms.