The government has released draft regulations to provide employees with greater control over their work scheme pensions.
Pensions Minister, Stephen Timms, announced changes in the regulations requiring employers to consult with active and prospective members, and their representatives, on significant changes to their occupational or personal pension provision.
The Department of Work and Pensions (DWP) has issued a consultation document, with the requirements aimed at employers with more than 150 employees from A-Day, employers with more than 100 employees, the following year and employers with more than 50 employees in 2008.
The DWP says consultation on these draft regulations will run until 26 August and is hoping to finalise them, ready for implementation on 6 April 2006, depending on the response it receives to the consultation.
Timms says the proposals have been widely approved and will provide employees with a voice regarding changes in their pension scheme. He says it is also important to link people with an understanding of their schemes, providing them with a sense that they too have a part to play in the management of their schemes.
Timms adds: “These Regulations provide the fuller detail of the requirements for employer consultation on pension changes which we set out in the Pensions Act 2004.”
But Wendy Beaver, head of the Pensions Board for the Institute and Faculty of Actuaries, will today warn delegates at its annual conference that the government’s reluctance to define the critical new concept of ‘prudence’ under the new statutory pensions framework could potenetially give individuals within a defined benefit pension scheme a "false sense of security" for the actual safety of their pensions.
Calling it a partial remedy, Beaver will say: "Funding labels such as ’fully funded’ or ‘prudent’ will not necessarily mean ‘secure’. While it is important that scheme members receive funding information about their scheme, they need to be alert to what the funding language means and not be lulled, literally, into a false sense of security."
If you have any comments you would like to add to this story or would like to speak to its author about a similar subject, telephone Gareth Vorster on 020 7968 4554 or email [email protected].IFAonline
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