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‘Cash for Pensions’ more developments
Following yesterday’s BeeLine, thanks to all of you who wrote in to let me know about the new guidance issued yesterday by the Pensions Regulator. Like Her Majesty’s Revenue and Customs (HMRC) the Pensions Regulator is also worried about people being offered inducements to leave final salary schemes.
As I said yesterday, this is something which has become more common lately where employers looking to reduce their pension costs try to persuade their employees to agree to poorer pension benefits in return for cash now.
While there may be nothing wrong in employers renegotiating pension scheme terms with their employees, the Regulator’s guidance, which highlights the responsibility of both employers and pension scheme trustees, says that people should be given enough information to make informed decisions. Trustees do not, of course, have to go along with something just because the employer has suggested it.
I think those of you involved in running or advising on occupational final salary schemes would benefit from reading the full guidance note published by the Regulator yesterday.
There’s a link here that will take you to that if you want: http://www.thepensionsregulator.gov.uk/guidance/inducementOffer/index.aspx
In fact, having just heard the result of the European Court Judgment on the Allied Steel and Wire (ASW) case, I think the events of these past two days will be looked back on as a kind of double whammy for employers and the Government. It seems that the true value of final salary pension benefits will soon hit home.
I’ll be writing more about the ECJ ruling tomorrow.
25 January 2007
Source:
Pensions Regulator "Inducement offers - Guidance outlines how employers, trustees and scheme members should deal with inducement offer" January 2007.
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