Commenting on changes to pensions announced by the Chancellor, Mike Smedley, Pensions Partner at KPMG, says:
“For once members of Defined Benefits pension schemes may be looking enviously at their colleagues in Defined Contribution plans. Whilst DC members will gain huge flexibility in their retirement, the Budget indicates that DB members won’t get access to the same choices – even suggesting that the legal entitlement to a transfer value from a DB plan might be removed. It is difficult to see the justification for applying a straightjacket to DB plan members whilst completely liberalising the rules for DC plans."
“At the same time, the flexibility for DC plans also brings its challenges. Individuals will face difficult decisions and the industry – employers, providers and pension schemes – will need to develop new products and services to help them. It looks like DC plan trustees will have a legal duty to supply free face-to-face guidance to individuals, which this throws up more questions about how “free” advice can be financed (from members’ pension pots?) and how members will be supported after they retire – given that they may need to decide how much pension to draw on a month-to-month basis."
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This article represents the views of the author only, and does not necessarily represent the views or professional advice of KPMG in the UK.