This report brings you news of three DWP initiatives: a new SI, a new condoc, and a new timetable for issue of regulations under the Pensions Act 2004.

The Pension Protection Fund (Hybrid Schemes) (Modification) Regulations 2005 (SI 2005/449), laid before Parliament yesterday, modify how the provisions of Part 2 of the Act operate in relation to hybrid schemes.

A hybrid scheme is defined in s.307(4) of the Act as an occupational pension scheme which is not a money purchase scheme, but does provide some money purchase benefits (even if these are solely derived from AVCs). This SI permits transfer or other discharge of liability for payment of the money purchase benefits in cases where a scheme failure notice has become binding. Special provision is made for repayment of member contributions, with interest, in relation to certain persons who are not entitled to compensation from the PPF. These regs have been laid without public consultation.

A full 8-week consultation has been launched today, however, on draft regs of wider interest. The Occupational and Personal Pension Schemes (Miscellaneous Amendments) Regulations 2005 seek to amend seven existing SIs. The draft regs make amendments necessary to:

• allow protected rights in contracted-out money purchase schemes to be commuted on retirement, on a pro rata basis;
• increase the trivial commutation limit, to an aggregate fund value of £15,000 in line with Inland Revenue rules;
• allow serious ill-health commutation of all contracted-out rights in all schemes, excluding any entitlement to a survivor’s pension (currently, serious ill-health commutation of protected rights in Appropriate Personal Pensions (APPs) is not permitted);
• allow protected rights in contracted-out money purchase schemes to be paid at the same time as all other rights in line with the Inland Revenue’s minimum pension age;
• allow commutation of Equivalent Pension Benefit (EPB)-only pensions on the basis of deemed consent. (Existing legislation allows schemes to commute EPB rights to a lump sum providing that these are the only rights held for the member by the scheme and that the member consents to the commutation. The proposed amendment will deem member consent to have been given where the scheme writes to the member at his/her last known address giving notice of the intention to commute and no reply has been received within 2 months of the date that the notice was sent); and
• specify that a contributions equivalent premium (CEP) need not be paid where the early leaver has elected to take a cash transfer sum. (From April 2006 early leavers with at least three months’ pensionable service but no vested rights in an occupational pension scheme will be given the choice of either a contribution refund or a cash transfer sum).

The consultation includes in addition The Personal Pension Schemes (Appropriate Schemes) (Amendment) Regulations 2005. These are described as minor technical amendments to make clear that Self-Invested Personal Pensions (SIPPS) are prohibited from being appropriate schemes and contracting out of the additional state pension. Other amendments allow for an authorised corporate director of an open-ended invested company to establish an appropriate scheme.

The consultation closes on 8 May 2005.

Finally, the DWP has made available an updated timetable for release of regulations under the Pensions Act 2004. For each of 130 sets of regs (!), it indicates what form planned consultation will take (if any); the date of coming into force; and whether it will be subject to negative or affirmative Parliamentary resolution. A copy of this document is available on request from regs@ariespensions.co.uk.