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DWP publishes new pensions regulations

DWP publishes new pensions regulations

Four sets of regulations have been laid before Parliament, bringing into effect new easements and requirements.

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There has been a flurry of new regulations laid before Parliament bringing pension changes into force from 6 April 2018. These bring into effect easements designed to help employers manage their debt in multi-employer defined benefit (DB) schemes, and to facilitate the bulk transfer both of contracted-out and defined contribution (DC) pension rights. There are also new requirements for DC scheme trustees to disclose details of costs and charges to members.

Deferred debt arrangements
Following a consultation last year, the Government has issued regulations making important changes to the employer cessation debt provisions for employers in non-segregated multi-employer DB schemes. These are effective from 6 April 2018.

The main measure provides for a new cessation option, allowing employers to defer the requirement to pay a cessation debt. This deferred debt arrangement will be subject to a condition that the employer retains all its previous responsibilities to the scheme. The arrangement is aimed, broadly, at employers whose only change in circumstance is that they are ceasing to employ an active member.

Bulk transfer of DC scheme rights
Following a consultation which started this time last year, regulations have now been laid that will remove the actuarial certification requirement for DC block transfers, replacing it with a condition that either the receiving scheme is an authorised mastertrust or the trustees take appropriate professional advice. The actuarial certificate requirements remain as an option up until October 2019 to make life easier for existing bulk transfer exercises. The regulations have been changed following consultation to make the requirement for taking advice easier to meet and check.

Regulator research suggests that 80 percent of the 2,100 DC schemes with more than 12 members have fewer than 1,000, so there is scope for this easement to lead to plenty of consolidation in the coming months. DWP intends to publish guidance by no later than the end of April.

Bulk transfer of contracted-out rights
These regulations will allow contracted-out DB rights to be transferred without consent to salary-related schemes that have not previously been contracted out – a useful easement now that contracting-out has been abolished. The regulations have now been laid with an effective date of 6 April 2018.

Disclosure of costs, charges and investments in DC occupational pension schemes
At the beginning of the year the Financial Conduct Authority published a policy statement setting out how providers must calculate and give information about transaction costs to independent governance committees and occupational pension scheme trustees.

This last set of regulations is related to this – setting out how the trustees of occupational DC schemes must publish not just transaction costs but all cost and charge information to members. There are new requirements for the Chair’s statement that DC schemes must produce which take effect for scheme years ending after 5 April 2018 and various other requirements about making charges information available to members on websites etc. DWP guidance has been published alongside the regulations to help trustees comply with the new requirements.

For further information please contact:

Simon Mayho

Andrew Scrimshaw

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