More Pensions Act clauses - but still no sanity clause!
The first thing is that the Occupational Pensions Regulatory Authority (Opra) has recently published some interesting new research on what it calls “very small pension schemes”. This is a bit of a dying shot from Opra as it is soon to be replaced by the new pensions regulator (cleverly called the Pensions Regulator by the way) on 6 April this year. Interestingly, though, this last report from Opra gives us a good indication of the way the new regulator will implement its risk-based approach to regulation.
The Opra research has established that small occupational pension schemes with between two and eleven members make up the vast majority of pension schemes in the UK today. The really big occupational schemes have the most people in them, but the really small schemes account for most of the schemes. Of these small schemes approximately 85% are defined-contribution schemes. I don’t think BeeLiners would find that fact surprising, by the way, we know the vast majority of these schemes as Executive Pension Plans (EPPs), or Small Self-Administered Schemes (SSASs) and always have done. Opra notes that most often in the very smallest schemes the members themselves are usually either scheme trustees or directors of the companies involved. For schemes constructed in this way, where the members’, employers’ and trustees’ objectives are so clearly closely aligned, Opra is suggesting that the potential risk to members’ benefits is fairly low. Or as the report itself says; “a lighter regulatory touch may be appropriate when dealing with these very small schemes”. For those of us with an aversion from red tape that sounds like it can only be good news.
The Pension Protection Fund (Partially Guaranteed Schemes) (Modification) Regulations 2005 – no less – hit the streets on 10 February 2005, you’ll be pleased to hear. This modification of an amendment is all about ensuring that the Pension Protection Fund (PPF) will only be able to assume responsibility for the assets and liabilities of just the unsecured part of schemes that provide a partial guarantee. Another bit of small print really to ensure people who don’t need insurance aren’t forced to buy it. It’s a shame the same doesn’t apply to travel insurance when we go on holiday really isn’t it?
More importantly, though, The Protected Rights (Transfer Payment) (Amendment) Regulations 2005 have just come out as a consultation document. Consultation on this thorny topic is to end on 15 April 2005 and the issues being thrown up will be quite important to many people I think.
What these Regulations are seeking to amend is the way that Protected Rights benefits are treated when people are transferred from contracted-out money purchase schemes (COMPS). At the moment, contracted-out rights can only be transferred from a COMPS to another occupational pension scheme where individual members consent to the transfer and where the employer involved is the sponsoring employer of the receiving scheme. The proposal is that all this will change in future so that transfers will be able to be made without the consent of some scheme members. Basically this looks to me to be deferred members as it doesn’t apply for active members or pensioners. I’ll be keeping a close eye on this and will let you know how it pans out in April.
24 February 2005
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