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Eversheds comment: UK DPW publishes White Paper on state pension reform

  • United Kingdom

    15-01-2013

    In response to the publication of the UK Department for Work and Pensions White Paper entitled, “The single-tier pension: a simple foundation for saving”, Jeremy Goodwin, pensions law expert at global law firm Eversheds comments: 

    "The single-tier pension is designed to simplify state pension provision. However, as tends to be the case with pension reform, the devil will be in the detail.

    "The Government’s proposals will have a major effect on private sector defined benefit contracted-out pension schemes. If no further steps are taken, national insurance contributions for both employers and members could increase without any proportionate change to scheme benefits (to keep costs the same). In order to address this, it is proposed that employers would have a power to change future service benefits or increase member contributions. Employers and Trustees will need to consider whether, and if so, how this power is to be used in advance of the end of contracting-out in April 2017.

    "The White Paper mentions possible changes to the law on the conversion of guaranteed minimum pensions (GMPs). We hope that these changes make GMP conversion workable so that schemes have a practical solution for how to address this notoriously complicated area."

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