Member Article

Following the Supreme Court’s decision in Bridge Trustees in 2011 (see further here), the Government announced that it would legislate to directly counteract the effect of the judgement and make it clear that benefits under a pension scheme cannot be regarded as money purchase benefits if it is possible for a funding deficit to arise in respect of any of those benefits.

The Government issued a consultation last year on the new definition of “money purchase benefits” and accompanying regulations which seek to address concerns that were raised as to how the new definition would apply in practice and interact with the existing references to money purchase benefits in numerous pieces of legislation.  Transitional protections are also being introduced to validate certain decisions taken by trustees in good faith on the basis of the previous legislation that was in place.  This is necessary to avoid trustees having to revisit past matters, such as the wind-up of a scheme or the calculation of an employer debt. 

The Pensions Minister, Steve Webb, has now confirmed in a written parliamentary statement that the new definition of “money purchase benefits” will be brought into effect in July 2014 and that transitional relief will apply to the date the legislation is adopted and not only to July 2011, when the Government announced that it would legislate on this matter, as had initially been intended.