Pensions - Articles - LCP comment on Treasury decision

  In answer to the key question posed in that consultation, Treasury have confirmed that private-sector “defined benefit” pensions will continue to be permitted to transfer to “defined contribution” pension schemes in the future. In this way, members of defined benefit pension schemes who have not yet retired will be able to make full use of the new flexibility in the pensions regime from April 2015. In the extreme, members of traditional final salary schemes will be able to cash out their entire benefits on the day of their retirement, subject to normal income tax. The new rules won’t apply to members of unfunded public sector pension schemes.

 Jonathan Camfield, partner at Lane Clark & Peacock commented:

 “We‘re delighted that Treasury has concluded that DB to DC transfers can continue. Of course, many pension scheme members will want to retire and receive their normal pension benefits, but some members will want to make use of the new flexibility, which might be particularly attractive for those with health issues, those with high debts and those who want to have more control over how and when they receive their income in retirement.”

 “We expect many employers and trustees of pension schemes to review their retirement options and processes in the run up to April 2015, and most to conclude that it makes sense to offer the new flexibility to their members.”