UK - Schemes have made an 11th hour bid to amend the government's proposed changes to priority order rules.
The National Association of Pension Funds’ official response to the draft regulations – which has now closed for consultation – claims the changes are “too complicated” and “very difficult” for schemes to adopt.
Political liaison officer Vicky Bolton said: “The new proposal is unworkable for schemes. It relies on information that many schemes don’t have, namely each individual’s length of service in the scheme.”
She said this would add to administration costs because each member’s individual benefits would need to be calculated to incorporate issues such as leave without pay.
Now, active members are paid after insurers and deferred pensioners, leaving them with only a fraction of their pension entitlements.
The proposed changes would mean that contracted-out benefits would no longer be given priority and total benefits for active members would be calculated on a service-related basis, irrespective of age.
The NAPF believes priority order rules should return to their pre-1997 position, where any outstanding benefits were allocated to members at the discretion of trustees.
However, some employers have embraced the changes.
Engineering Employers’ Federation deputy director of employment policy David Yeandle said: “It is a price worth bearing to protect members and we are disappointed the government may not implement the changes earlier.”
The department for work and pensions said ministers would consider all the responses before implementing the changes “before June 2004”.
MPs failed to place legislation into the Financial Guidance and Claims bill that would have made pension guidance default, which Just Group director Stephen Lowe said left a "bitter taste".
Aegon has called for the government to double the tax exemption on employer-arranged pension advice, up from £500 to £1,000.
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