The Department for Work and Pensions (DWP) has launched a consultation which considers allowing contracted-out pensioner members to transfer to schemes which have never been contracted-out.
The plan is aimed at addressing concerns that pensioner members have been locked into their scheme following the abolition of contracting out for salary-related schemes last year.
Following the introduction of the new state pension last year, pensioner members have not been able to be transferred to schemes that have never been formerly contracted-out, while deferred members are still able to.
In response to concerns raised by the industry in previous consultations, the DWP has now proposed allowing these transfers, although only in limited circumstances where schemes are "at financial risk". These include where the scheme is undergoing a Pension Protection Fund (PPF) assessment, or a regulated apportionment arrangement (RAA) has been entered into.
The plan is designed to ensure pensioner members are not forced to accept lower liabilities, while ensuring the sustainability of an ongoing defined benefit (DB) scheme. A transfer would only be possible with a member's consent.
The consultation document said the government would later this year also consider other types of transfer to schemes which have never been contracted out, such as transfers to new schemes more generally and bulk transfers without consent.
The consultation opened on 10 April, and is accepting responses until 23 April.
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