In February’s pensions update, we noted that the Pensions Act 2008 makes provision for the cap on the 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. Where schemes decide to implement this optional change, the reduction will apply to pension accruals from 6 April 2009, although past service benefits will still be revalued at the previous rate.

Trustees and employers should seek advice if they are uncertain as to whether the wording in their scheme’s rules requires amendment to reflect the revaluation rate they have chosen to apply from 6 April 2009.