The National Employment Savings Trust (NEST) is to amend its scheme rules, allowing members to withdraw from their pots while still contributing.
The DC fund, set up to act as a scheme of last resort as the UK introduces auto-enrolment, has proposed a number of changes in light of the pensions freedoms, which allow members over 55 to access their savings.
Other tweaks being proposed will prepare for the lifting of contribution limits and allow for bulk transfers into NEST from April 2017, when restrictions imposed upon its launch are lifted.
NEST said that under current scheme rules, attempts by a member to withdraw cash would trigger the closure of member pots even if the member were still eligible for auto-enrolment contributions. The closure would contrary to the aim of the pensions freedoms introduced last year by chancellor of the Exchequer George Osborne to allow members access to their savings as required.
“For both these reasons,” the scheme’s consultation said, “we’re considering offering members below scheme retirement age and in receipt of ongoing employer contributions the option of leaving their account open when they take a 100 per cent cash lump sum.”
Other changes would allow the scheme trustee to authorise both bulk and individual transfers into and out of the scheme, and to abandon the annual contribution limit that has seen members earnings above the threshold saved into an additional contract-based scheme.
The consultation runs until 21 March.
In other news, the Pension Protection Fund (PPF) has revised its advice to restructuring and insolvency professionals to ensure the timely assessment of pension funds hoping to enter the lifeboat scheme.
The guides detail examples of when a sponsor may be able to sever its link with a defined benefit (DB) fund, and the information the industry must supply in case of an insolvency event being triggered.
Malcolm Weir, head of structuring and insolvency at the PPF, noted that the fund’s goal was to ensure the right payments were made at the right time.
“Progressing the assessment process as efficiently as possible is vital, and insolvency practitioners play a very important role in this,” he added.
He pledged that the PPF would be issuing further, more detailed guidance, over the course of 2016.