Pension fund benefits changes

aristote33

Background for the question is the proposed changes for a pension fund.

For instance,

• current pension accrual rate is 1/60ths based on pensionable salary in the year of accrual; proposed pension accrual rate is 1/75ths (in other words, it becomes much slower and smaller)
• CARE revaluation shifts from in line with RPI to in line with CPI (typically lower) between accrual and retirement (again, it becomes slower and smaller)

Consultation document is very clear about it: 'we regret the reduction in future benefits that would result from these changes'.

In other words, current benefit recipients are totally protected from changes, and active contributing members have to contribute and will get less when they receive their benefits.

Question

Is there anything in the law that prevents a private pension fund reducing the benefits of its current pensioner members, be it temporarily or over the long-term, to help preserve the sustainability of the fund?
Are changes always bound to be about 'future benefits' and never about 'current benefits'?

Thank you.

Silvertabby

Assuming that 1/60th benefits accrued to the date of change will be safe, and that the reductions only apply to future benefits, then I regret that there is nothing in law to prevent your pension fund from doing this.

I know it doesn't seem like it now, but you are really quite fortunate compared with the people who have had to change from a final salary /CARE scheme to a money purchase scheme.

hyubh

aristote33 wrote: »

Are changes always bound to be about 'future benefits' and never about 'current benefits'?

The law surrounding defined benefit pension entitlements is quite strict, and many (including me, anonymous guy on the internet...) think it would be a bad thing for it to be changed and allow unambiguously retrospective changes, as advocated by (for example) certain people following Tata Steel's woes. When you don't have this you have something like the state pension system, where the government of the day can change entitlements at the drop of a hat.

To be honest, the fact the company isn't just stopping future accrual entirely is a bit surprising (I'd expect that to follow in the next few years). A 1/75ths CARE scheme is something I could personally only dream of...