DWP Contradictions Final Nail in the Coffin for Flexibility in UK Pensions - GPS

1 September 2010 (PLANSPONSOREurope.com) Loss of DB benefits is final nail in the coffin for DWP promised ‘flexibility’ in UK pensions says Grove Pensions Solutions 

Grove Pensions Solutions (GPS), a specialist DB consultancy, said DWP contradictions have led to the final nail in the coffin for promised flexibility in pensions and savings. 

In a consultation document issued in August 2010 by the DWP on the abolition of contracting out, is the statement: “In addition to contracting-out terms, references to transfers between contracted-out defined-benefit and contracted-out DC schemes have been removed, as this will no longer be possible post-abolition.” 

In other words, with effect from April 2012, GPS argues that members of DB schemes will be banned from transferring their benefits to a DC plan. The consultancy argues that this means “Such members will therefore have their last glimpse of flexibility taken away from them.” 

Ken Tymms, corporate pensions manager at GPS said:  “Some commentators suggest that this is because neither the Financial Services Authority (FSA) nor the Pensions Regulator (tPA) trust financial advisers to give impartial advice about such transfers. I suspect however it has far more to do with the DWP wishing to avoid complex calculations and keep their workload down. Either way, they don't seem to be treating savers as adults and it certainly doesn't increase flexibility and choice: quite the reverse. If in doubt we could always ask the DWP – only one person though, to avoid receiving conflicting information.” 

Katherine Blackler
editors@plansponsoreurope.com