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Pensions minister Steve Webb hints at reprieve for private sector DB transfers

Pensions minister Steve Webb has hinted at a reprieve for defined benefit scheme members after the Government threatened to ban them from transferring out into defined contribution arrangements.

The Government has already said it will prevent public sector DB members from leaving the pension scheme to take advantage of DC liberalisations announced by Chancellor George Osborne in last month’s Budget.

The reforms, which come into play from April next year, will mean anyone aged 55 or over will be able to take their entire pot as cash.

The Treasury estimates that if 1 per cent of public sector members decided to transfer out it would cost the taxpayer £200m.

The Government is consulting on a range of options for private sector DB schemes, including imposing a similar ban.

Speaking to Money Marketing, Webb says: “We haven’t said no on private sector DB transfers but clearly it raises lots of issues about what happens to the assets that are left behind.

“On the positive side one of the options we are consulting on is, if it is OK by the scheme, then why not? Obviously there is a macroeconomic impact and an impact on gilt sales and all the rest of it, so there is a lot to think through and that is why we are having a three-month consultation.

“Instinctively I want to make it work but we will not proceed unless we can be confident it will be OK.”

Webb also admits there is a risk the Budget reforms could become complicated if people attempt to abuse the new flexibilities.

He says: “There is always a risk [of reforms becoming complicated]. It is fairly clear what we are trying to achieve but there is always a danger people will abuse freedoms and simplicities.

“We are still consulting on the details of how it’s going to work and there is time to get that right.”

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