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The new Pensions Bill – what it might mean for occupational pension schemes

United Kingdom
29/11/2006
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The Government has published a new Pensions Bill. Although it largely deals with changes to the state pension system, some points to note for occupational schemes (assuming the relevant Bill provisions are enacted) are:

  1. Schemes will be able to convert GMPs into normal scheme benefits providing they comply with certain safeguards. GMPs must not be converted to DC benefits, converted rights must be actuarially equivalent to the GMP, certain spouses' benefits must be provided and there can be no reductions to pensions in payment. GMPs may also be converted on an individual basis with member consent to facilitate transfers. Regulations may introduce additional restrictions on transfers of converted GMPs.
  2. Defined contribution contracting-out will be abolished. However, it seems that existing protected rights will continue to be protected. All members contracted out on a DC basis will automatically be contracted back in.
  3. The internal dispute resolution provisions in the Pensions Act 2004, which were never brought into force are amended to allow schemes to have a 2 stage procedure (as they currently do) if they want.

Please click here for a copy of the Bill and accompanying explanatory notes.

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