Contracting-out on a salary related/defined benefit ("DB") basis will be abolished from April 2016. The Government previously announced that employers would be given a "statutory override power" that would enable them to adjust their scheme to offset the additional National Insurance contributions arising from the abolition of DB contacting-out.

The DWP has issued draft regulations for consultation that set out how the statutory override power would operate. In particular, it sets out how the calculation is carried out that determines the reduction in the benefits of the scheme. For example, it states that the assumptions in the scheme’s Statement of Funding Principles should be used, but that any margin for prudence can be removed and replaced with a best estimate instead.

A copy of the consultation can be viewed here.