A Day simplifies things for contract based pension arrangements

Brian Spence

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Now the dust has settled following the introduction of the pension simplification rules, the advantage handed to contract based arrangements over trust based arrangements is plain for all to see.

Despite seeking to level the pensions’ playing field, actuarial and consulting specialist Spence & Partners says the new rules have given contract based arrangements a significant advantage.

For those looking at a trust based option, advantages such as early leaver refunds, greater tax free lump sums and higher funding rates, have now been lost. There are also additional costs to bear associated with the involvement of trustees.

Despite some potentially complex issues needing to be resolved to facilitate any move from trust based to contract based arrangements new legislation undoubtedly hastens an inexorable move towards contract based arrangements, a move which will be ‘simple’ for those establishing schemes for the first time.

However, as with many other areas in pensions it is the practical issues associated with resolving the legacy scheme problems which will undoubtedly slow the pace of change.

For full details of the issues involved please turn to the article As easy as A DC? On the Spence & Partners website.

For further information please contact David Davison at Spence & Partners (www.spenceandpartners.co.uk) on 0141 331 1004.

Issued on behalf of Spence & Partners by Blueprint Media tel 0141 353 1515
Date: March ’08

Brian Spence

Post by Brian Spence

Fellow of the Institute and Faculty of Actuaries and Society of Actuaries in Ireland, scheme actuary, professional pension trustee

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