7 December 2004 - Simplification for pensions - consultation on DC indexation regulations
Changes that will simplify the administration of Defined Contribution schemes are to be consulted on, announced Pensions Minister, Malcolm Wicks.
The department today published a consultation document on changes to the regulations governing the indexation of defined contribution private pensions.
Provisions in the Pensions Act 2004 will remove the indexation requirement on post-1997 DC rights. The consultation document now sets out proposals to remove the indexation requirements on pre-1997 DC rights.
Announcing the changes, Pensions Minister Malcolm Wicks said:
“These regulations will complete the picture which we began in the Pensions Act. Taken together, these changes, which have been widely welcomed, will increase the choices available for scheme members and provide an important simplification for DC scheme administration. They will also ensure that individuals receive the information they need to help them make an informed choice when purchasing an annuity.”
The consultation period will run until 31 January 2005.
Notes for editors
- Changes made in the Pensions Act will remove the requirement to index link defined contribution (DC) rights which have accrued since 1997. As announced during the passage of the Act, regulations will be made to remove the pre-1997 DC indexation requirements.
- The changes will affect pensions coming into payment after the Act and the amending regulations come into operation, planned for April 2005.
- The indexation requirement will remain for defined benefit pensions. The Pensions Act reduces the indexation cap from 5% to 2½% for DB pensions paid in respect of pensionable service after the provisions in the Act come into operation.
- The consultation period will run to 31 January 2005. The consultation document is on the DWP website at http://www.dwp.gov.uk/consultations/2004/index.asp
- The DWP is aiming to make and lay these regulations early in 2005 to come into force on 6 April 2005.
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