- Capping early exit charges for occupational pension schemes (part two)
- What is the scope of the cap?
- How is an exit charge defined?
- What are the sources of early exit charges?
- What charges are excluded from the early exit charges cap?
- What is the rationale for excluding MVAs from early exit charges?
- How will the exclusion of MVAs from early exit charges be regulated?
- What about terminal bonuses—will they be excluded from the exit charges cap?
- What does the consultation say about contractual rights?
- Does the cap discriminate on the grounds of age?
- How will the cap be applied?
- What is the proposed compliance and enforcement regime for the cap?
Pensions analysis: Exit charges for people who access their pensions early in existing occupational pension schemes that contain ‘flexible benefits’ will be capped at 1% under proposals issued for consultation by the Department for Work and Pensions (DWP) on 26 May 2016. Such schemes will not be able to apply any exit charge for new customers after the proposed new rules come into force. The consultation closes on 16 August 2016 and legislation is set to come into force in 2017. In part two of two articles looking at the DWP consultation, the Lexis®PSL Pensions team takes a closer look at the detail of the proposals and the thinking behind them, including how the cap will be defined and what charges will be excluded.
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