The DWP has announced that following a recent consultation (see our earlier report), it now plans to bring The Pension Sharing (Pension Credit Benefit) (Amendment) Regulations 2008 into effect on 6 April 2009. The original target date was 1 October 2008.

The regs amend the rules on payment of pension credit benefit held in occupational pension schemes, so that instead of having to wait until normal benefit age (usually between 60 and 65), an ex-spouse will be allowed to receive payment from age 50 (55 from 2010), in line with the tax rules. The amendments also enable payment of certain lump sums before NBA (e.g. pension commencement lump sum), including where ill health permanently prevents a pension credit member from following his/her occupation.

The consultation on these regulations began on 29 May 2008 and ended on 21 July 2008. 14 responses to the consultation were received. Most respondents said that the regulations could be implemented in October, as schemes do not have to offer pension credit benefit members payment of pension credit benefit before normal benefit age. The Ministry of Defence and the Scottish Public Pensions Agency, on the other hand, said that they would not be able to implement the change in October.

Four respondents suggested that to make administration easier, this proposal should be implemented at the same time as safeguarded rights are abolished. Safeguarded rights (pension credit benefit derived from contracted-out rights) cannot be paid before age 60 and cannot be paid as a lump sum. These restrictions are not affected by the new regs, and will be removed only when safeguarded rights are abolished altogether. A provision in the Pensions Bill currently before Parliament will achieve this. However, debate on the Bill has taken longer than originally expected (largely because of the volume of Government amendments laid) and is not expected to receive Royal Assent until after 1 October 2008.

Another factor is that the existing reg 3 of the Pension Sharing (Pension Credit Benefit) Regulations 2000 (SI 2000/1054) cross refers to reg 9 of the Pension Sharing (Safeguarded Rights) Regulations 2000 (SI 2000/1055). Even though this cross reference has been removed in the Amendment Regs, until safeguarded rights are abolished reg 9 will still have to be complied with.

The Government agrees that these two sets of provisions complement each other and should be made at the same time. Hence the Amendment Regulations will take effect when safeguarded rights are expected to be abolished, namely on 6 April 2009.

At the date of writing the final regulations had still not been published, but will be available eventually on OPSI’s website.

Footnote

Since the December 2004 Pre-Budget Report it has been Government policy under the Common Commencement Date (CCD) initiative to bring new secondary legislation which impacts on business into force only on 6 April and 1 October, wherever possible.