UK Government to restrict or ban UK Pension Transfers from DB to DC Schemes #UKPensionTransfers # UKPensions #IN
29 Tuesday Apr 2014
The UK government will ban public sector workers from transferring pension pots to defined contribution (DC) arrangements and is considering similar restrictions on private sector schemes, it has announced.
It is now consulting on whether the same restrictions should be applied to private sector defined benefit (DB) schemes.
Chancellor George Osborne announced in March 2014 dramatic changes to drawdown rules and a guarantee of free, face-to-face impartial advice for anyone retiring on a DC pension.
In the Budget 2014 document, HM Treasury acknowledged the change will have implications for those retiring on DB pensions and “could lead to more people seeking transfer for DB to DC schemes”.
This could result in “a significant cost to the taxpayer” in relation to public sector schemes, which are “largely unfunded”.
As such, the government will remove the right to transfer from public sector schemes to DC arrangements “except in very limited circumstances”.
HM Treasury said it will only allow private DB scheme members to transfer to DC “if the risks and issues around doing so can be shown to be manageable”.
It explained: “The government would in principle welcome the opportunity to extend greater choice to members of private sector defined benefit pension schemes, it will not do so at the expense of significant damage to the wider economy.
“Funded defined benefit schemes play an important role in funding long-term investment in the UK economy, which the government does not want to put at risk.”
The consultation into the changes around DC pensions and how to treat private sector DB schemes will close on 11 June.
Expats Pensions Comment:
There are currently significant advantages for clients that are living or considering moving overseas to consider transferring their UK Pension to a Qualified Recognised Overseas Scheme (QROPS). For a free pension consultation and report on your scheme from our experts, please see our website www.expatspensions.com