In our September 2008 update we included a reminder that the Pensions Bill (now the Pensions Act 2008) made provision for the cap on revaluation of deferred pensions for early leavers from defined benefit (final salary) pension schemes to be reduced from 5 per cent to 2.5 per cent per annum. The likely implementation date was thought to be 1 January 2009.
The Department for Work and Pensions (DWP) has now announced that this reduction will apply to pension accruals from 6 April 2009.
Comment: this change should give schemes time to make the necessary changes. The previously proposed date of 1 January 2009 was too close for those employers who need to consult members before making any change.
Trustees should check their scheme rules, as this change may happen automatically for some schemes, depending on the drafting of the relevant provisions. Where amendments are necessary, immediate action is needed in order to comply with the consultation requirements and to have any rule change in place by 6 April 2009.