Trust-based schemes will be allowed to offer short service refunds for up to 30 days following an amendment to the Pensions Bill filed by the Government today.
The two year short service refunds currently available to occupational schemes are to be banned from 2014. This latest concession will mean occupational schemes will have broadly the same flexibility around refunds as contract-based ones.
Aviva head of pensions and investment policy John Lawson says: “This basically brings the occupational world in line with the contract-based world as far as refunds are concerned.
“The occupational schemes had been promised by Government that in return pot follows member would be sorted at the same time. Webb is pressing ahead on the basis of what Tisa have been doing on Isas, but there is a feeling that it is wishful thinking to expect that to be solved by then.”
Towers Watson senior consultant David Robbins says: “It is good to have it clarified that there is now no difference between what happens on short service refunds when people are automatically enrolled into trust or contract schemes.
“The condition that pot follows member be solved at the same time was decoupled from rebates when the DWP launched its paper back in April.”