In its response to an independent Review of Pensions Regulation, the Government has unveiled its proposals for easing the burden of regulations on employers providing pension schemes. In particular, the Government is proposing to reduce the cap on the revaluation of deferred pensions so that the maximum increase required - between a member ceasing to build up any further rights in the scheme and their scheme retirement age - would be 2.5 % per annum. The current cap is 5 % per annum. The Government is also proposing to introduce a ‘statutory override’ to make it easier for scheme rules to be amended to take advantage of measures in the Pensions Act 2004 which reduced the cap for annual increases to pensions derived from benefits accrued since 2005 from 5 % to 2.5 %. A statutory override would also make it easier to make amendments to reflect any change to the cap used for the revaluation of deferred pensions.
The Government also intends to explore the following areas:
- The circumstances in which an employer leaving a multi-employer scheme must make a payment to the scheme under the Employer Debt Regulations.
- Principles-based legislation, starting with simpler rules on what schemes must tell members.
- Employer concerns about the existing rules on surplus funds in defined benefit schemes.
The full Government response to the Deregulatory Review’s findings is available at: www.dwp.gov.uk/pensionsreform/deregulatory_review.asp.