UK - Proposals for easing the burden of regulations on employers providing pension schemes unveiled by minister for pensions reform Mike O'Brien, have been slammed by unions and experts.
The DWP published its response to the findings of an independent review of pensions regulation carried out by Ed Sweeney and Chris Lewin.
TUC General Secretary Brendan Barber said: “While we welcome that ministers have stood up to the very strong employer lobby to end Limited Price Indexation (LPI) for pensions in payment, we are very disappointed at the proposal that the cap on the revaluation of deferred pensions should be cut from 5% to 2.5%, against the recommendation of the review.”
Barber explained it was particularly important for those with broken careers, typically women and carers and added that the TUC would resist this proposal during the consultation, and would also reject any proposal to make it easier for employers to claim scheme surpluses.
David Everett, head of pensions research at Lane, Clark & Peacock was also critical of the review.
Everett said: "The Government has managed to add to the regulatory burden. If the sponsoring employer wishes to make the limited cost savings available, the pension scheme will have to create an additional benefit slice for those with service that straddles the introduction date.
“Not only is this counter to simplification, but it is inconsistent with previous changes to Guaranteed Minimum Pension (GMP) revaluation,” said Everett.
O’Brien had claimed: “These measures will reduce costs and will make it easier for schemes’ rules to take advantage of specific relaxations to legislation. We want to seek further views from stakeholders on these plans before we introduce any changes, so there will be a short period of consultation.
The Government proposed a number of measures including reducing the cap on the revaluation of deferred pensions so that the maximum increase required in the value of pension rights - between a member ceasing to build up any more rights in the scheme and their scheme retirement age, would be decreased to 2.5% per annum from 5% per annum.
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