International Trade

New Age Of Muddle

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...particular practice was not contained within the list did not mean that it was necessarily discriminatory.

The second significant change related to providing exemptions for schemes that had within them separate sections relating to different parts of the workforce arising from, for example, transfers from other employment in consequence of corporate activity or from changes made over time (and for which it was necessary to continue to provide a certain benefit only in relation to those who had joined the scheme on or before a particular date).

The amending Regulations also intended to take away some of the difficulties in relation to offsetting to reflect state provision, certain dependants’ benefits and to address the issues arising in consequence of changes in practice by HMR&C. Changes to the provisions relating to early retirement and redundancy, in particular dealing specifically with the issue of employer consent, were also implemented.

One of the issues that is worthy of particular comment concerns the contribution rates under defined contribution arrangements. It is common practice for this type of provision to have a contribution rate that increases with age in order to reflect, albeit very crudely, the fact that more money is needed to provide a pound of pension for an older person than for a younger one as it is invested for a shorter period.

Sadly, although the practice was seen as benign by the UK Government and not outlawed by the Directive, the drafting of a suitable exemption proved problematical. The first attempt seemed to demand a degree of exactitude that was very unwelcome. However, common sense appears to have prevailed and any increase in contributions aimed at providing a greater degree of equality of pension provision should be acceptable.

The latest version of the DTI Guidance was seen by the pensions industry as... continued on page four >

 

 

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