This week the DWP finally produced the Government Response to the 2007 consultation on Flexible Retirement and Pension Provision, together with some new draft regs.

Fifteen months ago (see Aries article) the Government sought views on the implementation of flexible retirement, following the coming into force of Schedule 2 (the pension provision) of the Employment Equality (Age) Regulations (SI 2006/1031, as amended by SI 2006/2931) in December 2006.

The Government wished to encourage flexible retirement, as a way of meeting the challenges of an ageing population, increasing the incentives to work longer and giving opportunities to plan for a longer working life and saving towards a more secure retirement. However, the Government was aware that, although the Finance Act 2004 allowed schemes to be flexible about when a pension can be drawn down, the implementation of the Age Regulations had caused confusion as to whether scheme rules can allow flexible retirement.

The 2007 condoc simply comprised 20 questions and was widely viewed as unsatisfactory: employers and the pensions industry required a clearer steer. This week's response from the Government summarises the views of those who responded; poses five new questions; and attaches draft amendments to the Age Regs. These cover two alternative options:

1. a wide exemption for all pensions rules and practices linked to flexible retirement options; and
2. a narrow option allowing OPSs not to provide death in service benefits for members in flexible retirement.

The DWP is seeking responses to this new consultation by 10 March 2009.