View more on these topics

DWP: Court ruling puts members’ pension protection rights “in doubt”

The Government says workers’ pension protection rights are “in doubt” after the Supreme Court ruled against the DWP in a case which will force it to write new legislation.

The case arose following the wind-up of the Imperial Home Décor scheme, a defined benefit and defined contribution ‘hybrid’ pension scheme which qualified for help from the Financial Assistance Scheme.

The DWP intervened in the case because of possible ramifications around the legal definition of ‘money purchase benefits’. Government legislation currently states that money purchase schemes do no qualify for help from the Pension Protection Fund and the Financial Assistance Scheme.

The Supreme Court has ruled against the DWP, which argued that money purchase schemes could not have a deficit. As a result, legislation will need to be amended retrospectively so members’ of money purchase schemes with deficits are protected.

A DWP spokeswoman says: “It is clear that the judgment will result in some schemes being regarded as providing money purchase benefits under the current legislation, even if it is possible for funding deficits to arise in respect of those benefits.

“This will place some schemes outside the scope of a wide range of legislation, including that governing scheme funding, employer debt, the Pension Protection Fund and the Financial Assistance Scheme.

“We therefore intend to introduce legislation with retrospective effect in order to provide certainty and to ensure appropriate protection for scheme members’ benefits and compliance with our obligations under European law.

“Workers who hitherto thought their rights were protected have been put in doubt by a ruling of the Supreme Court.”

Bridge Trustees represented the Imperial Décor pension scheme in the case.

Bridge Trustees chairman Giles Orton says: “The DWP has argued that a scheme should only be treated as money purchase if it can’t have a deficit, and that is how they’ve drafted all their legislation. So things like the PPF wouldn’t apply to money purchase schemes.

“But the Supreme Court has ruled that you can have benefits that are money purchase but still have deficits.

“The DWP needs to be careful when it writes the new legislation. This problem arose because they got the legislation wrong in the first place.”

Recommended

Government amends basic pay definition

The Government has bowed to industry pressure over automatic enrolment self-certification rules and amended its definition of basic to exclude “variable elements” such as commission, bonuses and overtime. In May, Money Marketing revealed that a last-minute change to the tests used by employers to self-certify their pension scheme meant they would be based on basic […]

profile.jpg

Lesley collins

The chief executive of Independent Women and Edinburgh Investment Consultants has made advising women about financial matters her unique selling point and the patronising comments only make her more determined. Interview by Rachael Adams

Time for finance to get ‘back to basics’?

If the boom years felt like the most extravagant party for a generation, then the post crisis years are the hangover that we just can’t shake off. Banks have shouldered much of the blame for our current economic woes, reflected in historically low levels of trust – Ipsos MORI research from June 2011 found that […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment

    Close

    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm

    Email: customerservices@moneymarketing.com