The DWP has issued consultation on draft consequential amending legislation relating to the abolition of DC contracting out from 6 April 2012. Consultation closes on 19 October 2010.
Points of interest include:
- confirmation that schemes will not have to track protected rights; they will be treated the same as any other money purchase benefit;
- a contracted-out deduction to survivors’ SERPS; survivors will be treated as if they had received a 50% pension in relation to any period in which the earner was contracted-out on a money purchase basis;
- contracting-out certificates for COMBS will remain valid for the salary-related sections;
- there will be a disclosure requirement of minimum information which must be provided to all affected members;
- although the effective end date for all protected rights is 6 April 2012, for ease of scheme administration there will be a transitional period of three years to allow adjustments to be made to minimum payments.
One apparent anomaly in the consultation is the statement that transfers from DB contracted-out schemes to DC schemes will no longer be possible. It is not clear why this restriction, if intentional, is to be imposed.