This afternoon the DWP has laid the promised correction to the error concerning trivial commutation of GMPs (see Aries article) in last November's Occupational and Personal Pension Schemes (Authorised Payments) Amendment Regulations 2009 (SI 2009/2930). This amendment to the Contracting out Regs (SI 1996/1172 Reg 60, as substituted by SI 2006/744 and amended by SI 2006/1337 and SI 2009/2930) is contained in Reg 2 of The Occupational and Personal Pension Schemes (Miscellaneous Amendments) Regulations (SI 2010/499).

There is a problem with this, however, which Aries has this afternoon drawn to the attention of the DWP. The correction in Reg 2 fails to incorporate the expected backdating provision to 1 December 2009, the date on which the original amendment came into effect. All provisions of this particular SI come into force together on 6 April 2010. This might cause some consternation among schemes which had already 'pressed the button' to commute GMPs on or shortly after 1 December, before the error in the Regs which legally prevented this was acknowledged. Aries has drawn the problem to the attention of the DWP, who have agreed that this is not what was desired. Aries understands that notwithstanding the date, any GMPs commuted for triviality since 1 December 2009 will NOT be treated by HMRC as an Unauthorised Payment. The DWP has agreed to distribute a message of reassurance to this effect via the Joint Working Group.

With one exception, the remainder of this set of Amending Regs were the subject of a consultation which began on 25 September 2009 and ended on 18 December 2009. Today the DWP has also published the official response. Most commentators had focussed on the proposed amendment which added changing the definition of pensionable earnings to the listed changes on which an employer is required to consult when such a change is proposed to a DB scheme. The draft regulation described the new listed change as changes to the definition of pensionable earnings in the scheme rules. Five respondents suggested that restricting the change to only those changes made in the scheme rules was too narrow. Employers could change the definition of pensionable earnings outside the scheme rules. This would affect the members' pension outcomes and the employer should be consulting on such a change.

The Government agrees. The description of the listed change has been widened so that the employer is required to consult when changes are made to which elements of pay constitute pensionable earnings, and where changes are made to the proportion of any element of pay that is to be 'pensionable', or where there are limits put on the amount of any element of pay that is pensionable. A definition of "pensionable earnings" has also been added to the regulations.

Regulation 8, which was not part of the consultation, is an amendment to the Occupational Pension Schemes (Modification of Schemes) Regulations 2006 (SI 2006/759). The Registered Pension Schemes (Modification of the Rules of Existing Schemes) Regulations 2009 (SI 2009/3055), which came into effect on 11 December, removed the requirement for approval from HMRC for rule changes to pension schemes. This regulation makes a consequential change which enables the trustees of a trust-based pension scheme to alter a power of amendment in the scheme rules to remove a requirement for HMRC approval for rule changes. It also enables trustees of a scheme where there is no power of amendment which would allow them to remove a requirement for HMRC approval in the scheme rules, to remove that requirement.

It is customary at this time of year to experience a torrent of new secondary legislation from the DWP in particular, and this year looks like proving no exception.