Plans have been put forward by the government to change the rules on company pension schemes. The reforms would see a reduction in the level of protection that schemes have against inflation. Currently, anyone who leaves an employer and who does not take their pension until they retire can see their entitlement adjusted by up to a maximum of 5 per cent each year to compensate for rises in the cost of living. Should the changes be introduced, the maximum deferred revaluation will fall to 2.5 per cent. The purpose is to cut the cost to employers of operating pension schemes and to discourage firms from shutting down final salary schemes. Only pensions accrued in the future would be affected; pensions built up prior to the change would still be revalued at up to 5 per cent a year. The National Association of Pension Funds (NAPF) applauded the proposals. A spokeswoman said: “We are pleased that the government has listened to the NAPF’s calls to reform the rules related to the revaluation of deferred pensions. These proposals will help sustain the future of defined benefit pensions, which provide valuable income to millions of working people in retirement.” The reform is now due to go to consultation. Date:23 October 2007
Content by: Made Simple Group
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