The DWP has published a consultation document and draft regulations making amendments to the contracting-out legislation. Consultation closes on 6 November 2011.
The draft regulations 2012 propose, from 6 April 2012:
- following a GAD recommendation, to increase the amount of the compound interest used in the fixed rate revaluation of GMPs for early leavers from four per cent to 4.75 per cent – meaning that schemes which use this revaluation method will need to adopt this figure for individuals who leave the sponsor’s employment on or after 6 April 2012; and
- to allow trustees of formerly contracted-out DC occupational pension schemes to modify their scheme rules by resolution to take account of the abolition of protected rights. The draft regulations allow trustees to “modify the scheme for the purposes of removing all or part of a scheme rule which relates to protected rights, and which is no longer required as a result of [the abolition of DC contracting-out]”. The resolution must be passed before 6 April 2015.