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Changed to Pension Rights

Changed to Pension Rights

From Easter Monday (6 April 2015) there will be a significant increase in the flexibility around accessing defined-contribution or money purchase pension savings.

At present, in most cases, the only option for people in one of these workplace pension schemes is to buy for an annuity. The change will mean that individuals aged 55 or over will be able to access their pension funds flexibly, subject to their marginal rate of tax. There are different options of how they will be able to do this and it will still be possible to purchase an annuity or receive a pension from an occupational scheme, as under the present system.

The state pension system combines a contributory state scheme, consisting of a basic retirement pension and an additional pension with a private system of occupational and personal pensions. The state pension age for men is 65 and it is in the process of increasing from 60 to 65, for women. (It will be 65 by 6 November 2018). It is predicted to increase to 67 for both sexes by 2028.

When it comes to occupational pension schemes Trustees oversee the process. Employers can offer employees membership of an occupational pension scheme, which can be contributory or non-contributory. Subject to the auto-enrolment provisions, employers cannot force employees to become members of a scheme, although membership can be automatic unless the employee requests in writing to opt out.

For those who do not have access to an occupational pension scheme, they may choose to invest in a personal pension plan. Employers may offer personal pensions to employees on a group basis which is much easier to run than an occupational pension scheme as trustees are not needed.

If you have any questions regarding the legality of pension schemes, our solicitors and we will be happy to discuss your situation with you in more detail so that we can reach a resolution that is best for you, your company, and your employees.

This information is intended to provide a general and generic overview only and is not intended to represent comprehensive legal advice. It should not be relied upon without first obtaining detailed legal advice.