Budget 2012: chancellor signals death knell of contracting out for defined benefit pension schemes, says pensions consultant
Tim Soare, March 22, 2012
The Government is holding to its plan to reform the State Pension into a single tier scheme for future pensioners as announced last year and will provide a White Paper next spring.
According to Paul Wilson, director at Xafinity Consulting, with the merging of the Basic State Pension, the State Second Pension Scheme and the potential merging of income tax and national insurance, the death knell for contracting out Defined Benefit schemes has been sounded.
He said: "Despite the usual rumours of the abolition of tax-free cash and the removal of higher tax rate relief, the publication of the budget has had little direct impact on pension arrangements.
"We have already had the removal of the default retirement age for business in the UK and the challenge will be to ensure pension arrangements are designed and can be flexible to move retirement age in line with State Pension Age"
Wilson stressed the importance of companies ensuring their employees are aware of the change and suitably prepared.