In the August 2014 edition of Pensions Priorities we mentioned the DWP's consultation on proposed powers for private sector employers with defined benefit pension schemes to amend scheme rules to compensate for additional national insurance costs resulting from the abolition of contracting out from 6 April 2016.

Final regulations1 which deal with much of the detail of this power came into force from 6 April 2015. They include provisions which say that:

  • In a multi-employer non segregated scheme, the principal employer may make the amendments on behalf of all the employers;  
  • The actuary who is required to give a certificate in relation to the proposed amendments must be a Fellow of the Institute and Faculty of Actuaries and must be appointed by the employer/principal employer;  
  • The scheme trustees are required to provide, in writing and within a reasonable period agreed with the employer, any information reasonably requested by the employer in connection with the use of the power;  
  • Following the actuary issuing the necessary certification, the employer must consult with the trustees about an appropriate amendment date and as soon as reasonably practical notify them of that date in writing – amendments may not have effect before 6 April 2016.  

Any employers exploring whether to use these powers should consider with their advisers, the detail of the legislation and processes involved so that measures are in place in time for when contracting out ceases from April next year.