Ban on active member discounts (AMDs)

The following Pensions practice note provides comprehensive and up to date legal information covering:

  • Ban on active member discounts (AMDs)
  • What is an active member discount?
  • To whom does the AMD ban apply?
  • Impact of the AMD ban
  • Position between 6 April 2015 and 5 April 2016
  • Compliance and enforcement of the AMD ban
  • Workplace personal pension schemes
  • Occupational pension schemes

Ban on active member discounts (AMDs)

With effect from 6 April 2016, active member discounts (AMDs) have been banned from 'qualifying schemes'.

The provisions implementing this ban can be found:

  1. for DC occupational pension schemes, in the Occupational Pension Schemes (Charges and Governance) Regulations 2015, SI 2015/879, reg 11, and

  2. for workplace personal pension schemes, in COBS 19.6.11–12

What is an active member discount?

An AMD, also known as a deferred member penalty, is the practice of imposing higher charges on deferred members (referred to in the Occupational Pension Schemes (Charges and Governance) Regulations 2015, SI 2015/879, as 'non-contributing members') than on active members (referred to as 'contributing members').

To whom does the AMD ban apply?

The ban on AMD discounts applies in respect of any active member who makes at least one contribution on or after 6 April 2016 to a qualifying scheme that is either:

  1. an occupational pension scheme which provides money purchase benefits, or

  2. a workplace personal pension scheme

A qualifying scheme is a scheme that meets certain minimum standards under the auto-enrolment legislation. For more information, see Practice Note: Auto-enrolment—what types of scheme may be used?—Qualifying schemes.

The ban does not therefore apply to members who became deferred members before 6 April 2016.

Note that:

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