Statutory override introduced
Draft regulations, The registered pension Schemes (Modification of Scheme Rules) Regulations 2011 have been issued. These regulations introduce a statutory override of existing pension scheme rules to allow schemes to pay a member's annual allowance charge in return for a reduction in their benefits.
Exclusion from restrictions in section 91 of the Pensions Act 1995
The government has also issued for consultation draft regulations that will disapply the restrictions in relation to forfeiture and surrender of pension rights under section 91 of the Pensions Act 1995 to allow the operation of Scheme Pays. The concern for schemes that offer Scheme Pays has been that where a member's benefits are reduced to pay the annual allowance charge that section 91 may prohibit this. For more about Scheme Pays generally, see our earlier e-bulletin.
These regulations will make it easier for schemes to operate the Scheme Pays facility. The regulations cannot be laid until the Bill is enacted with the result that the Scheme Pays facility effectively cannot be made available by schemes until then.