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Pickering is focusing on contracting-out change

The system of contracting out of the state second pension is to undergo a fundamental overhaul under the Pickering review, which is due to report in June.

Speaking at the NAPF Conference in Brighton last week, the head of the Department for Work and Pensions simplification review Alan Pickering said he would be looking at “contracting out in particular – simplifying it retrospectively and the extent to which it should remain a feature of our landscape”.

Experts believe this may mean scrapping the system of separating contracted-out funds from the rest of a pension pot, which would streamline buying an annuity and the whole admin process.

Pickering said his changes would make it easier for people to accumulate pension funds and would relax restrictions on the benefits they can receive.

As reported in Money Marketing last week, Pickering has finished his report and is planning radical changes to the entire private pension system.

He confirmed the number of pension schemes will fall and differences between many pension types will be scrapped.

Pickering said: “I want to it to be as easy as possible to accumulate as much pension as possible and for there to be less prescription on the output. This is a sensitive balancing act. There are far too many types of pensions and regulation between different types of schemes.”

•NAPF report, p8

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