Occupational pensions: draft regulations, legislative review and Guaranteed Minimum Pensions equalisation methodology
Download the full outcome
Detail of outcome
We published the government response to this consultation on 13 March 2017.
The 43 written responses we received were broadly supportive of the aims of the regulations. A number of responses, however, concern issues which require further consideration and which we will return to although we do not expect to be in a position to do so before autumn 2017. We are aware that the pension industry has been calling for urgent changes to be made to the arrangements for transferring contracting out rights to schemes that have never been contracted out, and we will be considering these issues before then.
We also sought views on the proposed methodology for equalising pensions for the effect of Guaranteed Minimum Pensions (GMPs). There was broad agreement by most respondents that the proposed methodology was a distinct improvement on the 2012 proposal as it avoids ongoing administration costs and potential “gold plating” or “double uplift” of benefit.
The government continues to believe that the proposed method meets the equalisation obligation derived from EU law but it has not asserted that the proposed methodology is the only means by which schemes can equalise benefits for the effect of GMPs, and does not propose to do so. It is for the trustees of a scheme to decide what if any action is needed for their scheme to provide equal pension.
DWP intends to give further consideration to the responses received on the proposed methodology with the industry working group (set up to consider this issue). Part of the department’s further work will be to decide in light of this consideration what further changes might be necessary to the methodology and what further changes might be required to legislation to enable schemes to convert benefits more easily.
DWP, with the assistance of the industry working group, has published guidance on the use of GMP conversion legislation for any employers or schemes wishing to use the proposed methodology.
The regulations are published on legislation.gov.uk – The Occupational Pension Schemes and Social Security (Schemes that were Contracted-out and Graduated Retirement Benefit) (Miscellaneous Amendments) Regulations 2017
Original consultation
Consultation description
Following the introduction of the new State Pension, salary-related contracting out was abolished on 6 April 2016. Legislation was introduced to enable trustees and managers to administer former contracted out schemes effectively . Further changes to that legislation are now needed to help improve scheme administration and provide clarity.
The consultation also deals with secondary legislation which has been introduced in the past where the department committed to review the provisions.
The consultation also seeks views on a new methodology for equalising pensions for the effect of inequalities caused by Guaranteed Minimum Pensions (GMPs), and potential changes to GMP conversion legislation that may be needed to enable equalisation to take place.
Documents
Last updated 18 April 2019 + show all updates
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Added link to 'Guidance on the use of Guaranteed Minimum Pensions legislation' page.
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Published the government response to this consultation.
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First published.