DWP changes 'may lead to unintended consequence'

24 August 2010 at 14:57

DWP changes 'may lead to unintended consequence' The current age 75 consultations being carried out by the Department for Work and Pensions (DWP) could result in another "unintended consequence" in which many investors are left high and dry, one expert has suggested.

Mike Morrison, AXA Wealth's head of pension development, noted that the current age 75 consultation "improves flexibility" in retirement and even allows the 'stripping out' of larger funds on securing a minimum income.

However, the expert pointed out that the proposals are geared to personal pensions and it is unlikely that existing occupational schemes will amend their rules to accommodate the changes

"Consider the scenario where a member of a defined benefit (DB) scheme with considerable accrued benefits wants to enjoy the flexibility of the new rules but the sponsor of the scheme does not want to or cannot amend the scheme rules," he stated.

Mr Morrison said that the only option would be for the member to transfer into a contract that does offer the facility, which may lead to a "raft" of transfers of senior employees from DB schemes.

Posted by Claire Robin ADNFCR-3006-ID-800037784-ADNFCR

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