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Need to make sense of changes to pensions?

The Department for Work and Pensions has amended the Pensions Bill and has redefined money purchase schemes and defined benefit schemes as a result of a recent High Court case.
According to John Lawson, head of pensions policy at Standard Life,” the case focused on dividing the line between DB and DC schemes”. The scheme at the centre of the challenge, Home Decor Pension Scheme, was, according to the DWP, promoted in the “same way as a money purchase scheme but it did not have any means to fulfil its promises”.
The DWP argued that it was a money purchase scheme, which the scheme denied. The Supreme Court found in the scheme’s favour. Mr Lawson said: “Money purchases schemes such as personal pensions [and/or] DC occupational schemes where funds go up or down in the market can only become an annuity with an insurance company or income drawdown. “Schemepensions have been left out of the reclassification, which implies they are DB. DWP wants to make sure trustees are funding these schemes properly.”
According to Mr Lawson, currently those in scheme pensions can reduce the level of income they are taking if their fund is running low or investments are performing badly. However the DB rules mean the provider would have to make up any deficit or risk the scheme falling onto pension lifeboat scheme the Pension Protection Fund, meaning schemes having to pay PPF levies.

Sounds too complicated, let Enable IFA’s of Bishop’s Stortford help you make sense of it.

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