Many of you will remember that there has been an ongoing debate and consultation on short-service refunds arising from pension schemes.
Whilst this does all sound (and indeed is) a bit ‘pensions anorak’, it’s important, as short-service refunds have the potential to undo much of the long-term social good that auto-enrolment could create if a success.
As I reported before the Summer, a final decision was delayed by the DWP. If you want to catch up with this and the story more generally please look here:
https://www.jelfgroup.com/blog/2011/06/short-service-pension-refunds/
However, we have some strong words reported in Professional Pensions Magazine from Steve Webb MP, The Minister for Pensions, recently which I think are self-explanatory:
“Webb described short service refunds as a ‘troubling feature of the system’ as they did not fit with the government’s aim of getting the population to save more for retirement.”
Apparantly he then went on to warn not to rely on such refunds in corporate pension planning, so it seems pretty clear where we are going.
I suspect that the final rules will be overly-complex to placate the larger trust-based schemes, but for most this is a clear indicator that short-service refunds will not be allowed going forward. Will keep you posted.
Best regards
Steve
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