How the government intends to change Pension Protection Fund rules to give more financial aid to retirement savers who have more than 20 years’ service is expected soon.
So far, the Pensions Minister Richard Harrington has ducked the issue in Parliament but promised guidance is on the way.
His pledge was in response to written questions from two MPs, which he dodged with a vague answer earlier this week.
The PPF and Department of Work and Pensions are also remaining quiet about when government policy is likely to be clarified by the minister.
Harrington told the MPs to expect an answer ‘shortly’.
Legal changes to the Pension Act 2014 have faced long delays. Draft regulations will be published for consultation of four to six weeks before they can be approved and implemented.
Injustice
The regulations are expected to give any final salary pension member in a scheme taken over by the PPF benefits worth an extra 3% for each year of service over 20 years.
Former Pensions Minister Ros Altmann says the government will bring in the extra protection for long service.
Part of the delay is thought to stem from a provisional judgement in the Court of Appeal in July.
Then, judges decided some compensation aspects of the new pension act may contravene European Union law and referred the case to the European Courts of Justice for review.
A ruling is not expected for some while.
Meanwhile Altmann pointed out that pension members with schemes run by the PPF may die before they receive their extra benefits promised by the government.
“This is an injustice and there is no good reason for the delay,” she said.
Lifeboat
The PPF is a government-backed lifeboat that takes on pension schemes from failed businesses.
Retirement savers who are already receiving payments keep their pension benefits at the same level, but those who have not started receiving money face reduced benefits.
The PPF can cut pension payments by up to 10% and cap total annual payments according to age.
This risk is leading to many workplace retirement savers to consider switching their pensions to a SIPP or offshore Qualifying Recognised Overseas Pension Scheme (QROPS) for expats, where they can take control of their money.
QROPS are particularly attractive as they pay a 30% tax free lump sum compared to 25% by an onshore scheme.
Further QROPS Information and Guidance
For more information about QROPS and the benefits it provides, download the iExpats QROPS Guide or complete the Get Advice form.
