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Gov't pushes through protected rights abolition with trustee rule changes

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Gov't pushes through protected rights abolition with trustee rule changes

The Department for Work and Pensions (DWP) is consulting on legislation to allow trustees to take account of the scrapping of protected rights in their scheme rules.

The proposed changes would help to ensure the abolition of contracting out by allowing trustees of formerly contracted-out defined contribution occupational pension schemes to remove scheme rules relating to protected rights.

The DWP plans follow concerns from trustees that they would not be able to remove the rules from their schemes.

'Until the protected rights rules are removed from the scheme rules, pension providers may not be able to take advantage of the easements introduced by the abolition,' said the DWP in its consultation paper. 'In some cases, schemes do not have the power to change their scheme rules.'

Talbot and Muir director of pension consultancy Nathan Bridgeman (pictured) said the plans would help to open up more occupational pension schemes to SSAS business, and remove restrictions on investments and benefits for scheme members.

'It's welcome news for everyone,' he said. 'It reduces costs for everybody, and reduces complexity. It's seen as illogical by consumers to have this separate pot for protected rights.'

The DWP is also consulting on changing the interest rate used to revalue guaranteed minimum pensions for early leavers of contracted-out schemes. The proposed rise, from 4% to 4.75% would provide a boost for scheme members but increase the burden on employers running pension schemes.

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