25 October 2005 - New regulations to ease burdens on ‘bulk transfers’
New regulations published today will make it easier for employers who are running several smaller schemes to bulk transfer members with protected rights into one single pension scheme said Minister for Pensions Reform, Stephen Timms.
The changes will mean that subject to approval from actuaries that a member’s rights will be broadly no be less favourable, protected rights can be transferred in the same way as other pension rights are currently. This will help reduce administrative cost and burden on employers.
Commenting on the changes Stephen Timms said:
"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.
“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 are about making it easier for employers to run these schemes which will benefit their members.
“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.”
It is expected that the new regulations will save pension schemes £10 million over the next three years and they will come into force from 28 November 2005.
Notes For Editors
- Protected rights. Where a person contracts out of the State Second Pension (formerly known as SERPS) the Government pays a rebate of National Insurance contributions into the individual’s private pension scheme. In a money purchase scheme, pension rights derived from the rebate are known as protected rights.
- The new rules on “bulk transfers” of protected rights are contained in the Protected Rights (Transfer Payment) (Amendment) Regulations 2005 (SI 2005/2906). These regulations amend the Protected Rights (Transfer Payment) Regulations 1996 (SI 1996/1461).
- The Actuarial Profession has confirmed that the GN16 “Retirement Benefit Schemes – Bulk Transfers” applies to transfers without member consent of all types of benefits as specified in legislation ie including transfers of protected rights.
- The Department undertook a consultation on the draft regulations. The formal Response to the Consultation is also published today and is on the Department’s website at http://www.dwp.gov.uk/consultations/2005/index.asp. A Regulatory Impact Assessment has also been published and this is on the Department’s website at http://www.dwp.gov.uk/resourcecentre/ria.asp.
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