The Government is to consult on allowing defined benefit scheme members to withdraw cash from their pension without first having to move their funds a defined contribution scheme.
As it stands, private sector DB scheme members aged 55 or over will not be able to take money directly from their fund when Chancellor George Osborne’s Budget reforms come into force in April next year. Instead, they will first have to transfer their pot to a DC scheme.
In a ministerial statement published this morning, Chancellor George Osborne says some of those responding to the Government’s consultation on pension reform said liberalising DB schemes should be considered.
Osborne says: “A number of stakeholders raised the issue during the consultation of allowing full or partial withdrawals direct from a defined benefit scheme, rather than an individual first needing to transfer to a defined contribution scheme.
“The argument being that requiring members first to transfer to defined contribution schemes creates additional unnecessary burdens and that allowing full or partial withdrawals from defined benefit schemes would better enable the pensions industry to provide the pension products that their members want.
“The Government intends to consult further on this issue.”
The Chancellor also announced that taking regulated financial advice will become a requirement for savers looking to move from DB to DC schemes.