DC Pension Changes Not Being Adopted !

Wilt000

Hi,
I have searched the web but cannot find an answer!
I am 55 years of age, and have contacted my pension provider about my DC pension. I have asked them to provide details and forms required to enable me to take advantage of the new reforms being bought in April 2015.
I do understand that pension companies are being inundated with requests at this time, but I wanted my request to be put on record ASAP. I also understand that the new changes have not yet received Royal ascent.
The reply I received states that "I can confirm that the proposed changes as per the 2014 Budget will only apply if adopted by the Scheme. The Trustees have not reached a decision on the proposed changes"
My question is: Will the budget changes be compulsory by law on the trustees of pension savings, or will they be lawfully able to refuse to adopt the changes?

Linton

The law will not force any pension scheme to support the new options. It wouldnt be practical for the pension companies to change their systems to add the functionality to every old pension scheme. So if your DC scheme doesnt support drawdown you simply transfer to one that does.

dunstonh

My question is: Will the budget changes be compulsory by law on the trustees of pension savings, or will they be lawfully able to refuse to adopt the changes?

The changes are optional for companies to follow. Retail schemes are starting to come out with what they are doing for legacy plans and current business plans but some will wait until March before they publish.

Occupational scheme may well take longer to decide.

However, none of this matters as if your scheme doesnt allow a feature that you want, you just move it to one that does.

xylophone

not yet received Royal ascent

A bit steep?:)

http://www.sackers.com/publication/finance-act-2014-receives-royal-assent/

http://services.parliament.uk/bills/2014-15/taxationofpensions.html

Wilt000

This would seem to answer my question.

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Millions may not have access to new DC freedoms, actuaries warn

Written by Lauren Weymouth
27/01/15
Millions of people may not have access to the new freedoms as over half of schemes are still undecided about whether they will enable their members to do so, actuaries have warned.

Analysis by Xafinity found 58 per cent of DC schemes are still undecided about whether to offer their members freedoms and 15 per cent don’t intend to offer any new flexibilities at all.

The same research also found only 5 per cent were planning on enabling members to withdraw their pension as a cash lump sum, and only 2 per cent were planning on offering the full range of flexibilities through drawdown.

Furthermore, 20 per cent of schemes said they are planning on providing their members with support in moving their benefits to an alternative scheme if they wanted to access the flexibilities.

Xafinity head of proposition development Paul Darlow said offering additional flexibility brings “extra costs to pension schemes as well as additional risk and operational implications”.

“Whilst many pension schemes have an aspiration to provide some flexibilities in the future, most will be unable to do so by April. This leaves millions of people near to retirement with considerable uncertainty – they have the choice between: delaying their retirement; retiring in their existing scheme and missing out on these new flexibilities; or moving their benefits into a new pension scheme in which there may be significant costs / charges,” Darlow said.

“Our advice is that members approaching retirement with a defined contribution pension should be contacting their pension schemes now to understand their options. We would also urge pension schemes to communicate proactively regarding the new flexibilities and if/when they will be available.”

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Re changing to another scheme - There may be large penalty costs from moving from one scheme to another!

So it would seem that there will be many people unable to take up the new pension freedoms.

If this happens there will be a bit of a backlash against the chancellor!

dunstonh

So it would seem that there will be many people unable to take up the new pension freedoms.

Rubbish article. As I said, all they need to do is transfer it to one that does. its making a headline out of nothing.

If this happens there will be a bit of a backlash against the chancellor!

As it wont happen there will be no backlash.

Wilt000

Re changing to another scheme - There may be large penalty costs from moving from one scheme to another!

david78

I don't know about that. We have moved a few small company pensions across into a SIPP and there were transfer no charges other than re-investment fund switches in the SIPP.

AlanP_2

Wilt000 wrote: »

Re changing to another scheme - There may be large penalty costs from moving from one scheme to another!

I'm no expert and haven't been down this route or looked into it as yet (not relevant to me at the moment), but in my limited experience I would say there are likely to be a number of providers actively seeking your pot of money and maybe even paying you a "bonus" to move it across to them.

Why? Because they will then get your n% fees each year.

Admittedly there may well be a charge to set up the draw down arrangements but that will apply whatever the scheme - someone is going to pay it in some way, somehow.

sandsy

Wilt000 wrote: »

Re changing to another scheme - There may be large penalty costs from moving from one scheme to another!

There's unlikely to be penalties moving from a trust based scheme such as you seem to be in. The charges are likely to be from the receiving scheme - one provider announced its plans today and will be levying a charge of 1.25% of the fund for transfers in enabling members to take all their fund at once.

mgdavid

Wilt000 wrote: »

Re changing to another scheme - There may be large penalty costs from moving from one scheme to another!

most unlikely; current moves cost nothing in my experience.