The pensions world is constantly evolving; never more so than at the current time. There are a number of important issues that trustees and employers of defined benefit (DB) pension schemes should be addressing to ensure their schemes are up to date and important deadlines are not missed.
Although the changes introduced in April mostly affect defined contribution (DC) schemes, the trustees of DB schemes also need to give some consideration as to how the changes will impact on their scheme:
Additional voluntary contributions
Trustees have to decide whether they are going to offer the new flexibilities to members in respect of these benefits and whether any amendments are required to the rules. If not offered, the trustees will require to be able to justify their decisions objectively, as members will be expecting to be able to access their AVCs.
As the new flexibilities are only available to DC members, there may be more DB members wishing to transfer to DC schemes to access their funds. If the transfer is over £30,000, trustees need to ensure the independent financial advice requirement is met and the transfer process is reviewed to ensure the necessary checks are built into the process to avoid any “mis-selling” claims. The Pensions Regulator has also indicated that it will be monitoring the DB to DC transfer market and will consider intervention if required.