Consultation outcome

Occupational pensions: draft regulations, legislative review and Guaranteed Minimum Pensions equalisation methodology

This consultation has concluded

Download the full outcome

Government response: Occupational pension schemes regulations 2017, occupational pensions legislation reviews and a proposed methodology for equalising pensions for the effect of GMPs

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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.

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

Summary

A consultation on draft regulations, occupational pensions legislation reviews and a proposed methodology for ensuring equal pensions.

This consultation ran from
to

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

Occupational pension schemes draft regulations, occupational pensions legislation subject to review and a proposed methodology for equalising pensions for the effect of GMPs

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Annex B: Government Actuary's Department report: Fixed revaluation rate for Guaranteed Minimum Pensions

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Annex C: The Occupational Pension Schemes and Social Security (Schemes that were Contracted-out and Graduated Retirement Benefit) (Miscellaneous Amendments) Regulations 2017

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Annex D: Ten-stage possible process for resolving the GMP inequalities issue (for comment)

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Published 28 November 2016
Last updated 13 March 2017 + show all updates
  1. Published the government response to this consultation.
  2. First published.