Following the introduction of new pension flexibilities in 2015, this update considers the issues & priorities for defined benefit & hybrid schemes.
Tax rules changed in April 2015, giving greater flexibility to access defined contribution (DC or money purchase) pension savings from age 55. The implications of these changes for defined benefit (DB) schemes (and for hybrid schemes – which offer both DC and DB benefits) are more significant than at first appears.
Statutory powers have been made available or extended so that schemes can harness the new pension freedoms quickly. However, the powers are limited; trustees seeking to rely on them will need to be mindful of the risks. In addition, the fine detail of existing scheme rules may present challenges for trustees or barriers for members looking to transfer their scheme pension.
In most cases, existing scheme rules will need to be reviewed. In all cases, trustees will need to act to ensure compliance with new safeguards for members looking to transfer to a DC scheme.
Key issues for defined benefit and hybrid schemes are set out in our update which you can download for free via the link below.
How Wrigleys can help
We work with trustees and employers to help plan for and implement the new flexibilities. Working alongside the scheme's consultants and administrators, the assistance we offer includes:
- A health check on the scheme's current transfer, discharge and commutation provisions to ensure they fit with new member options and trustee requirements.
- A review of the scheme's rules to ensure that small payment provisions are appropriate.
- Advice about the use of statutory powers to implement changes without a formal rule amendment.
- Advice on how best to make rule amendments which are required or desired.
- Drafting rule amendments.
- Assistance with queries arising from specific member transfer/commutation requests.
- Advice/training about trustee duties relating to transfers, including compliance with the Pension Regulator's guidance on DB to DC transfers and protecting members against pension liberation scams.
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The information in this article is necessarily of a general nature. Specific advice should be sought for specific situations. If you have any queries or need any legal advice please feel free to contact Wrigleys Solicitors