NAPF welcomes Budget re-think on small pensions

The National Association of Pension Funds (NAPF) welcomes the announcement concerning trivial commutation made in today’s Budget. The new measures mean a partial reversion to the pre-20061 position for occupational pension schemes whereby a one-off cash sum can be paid as an alternative to a regular pension without having to obtain details of pension entitlements held elsewhere.

The current requirement to obtain the extra details for an aggregation test adds significant cost to the commutation process. This will now be removed for any occupational scheme pension with value below £2,000 (that is, a pension of up to approximately £100 per year).

Along with other industry bodies, including the Society of Pension Consultants and the Association of Consulting Actuaries, the NAPF has campaigned for such a change since the new regime for so-called ‘trivial’ pensions was introduced in 2006.

NAPF Chief Executive, Joanne Segars, said, “While we would have liked the Government to allow a higher limit than £2,000, this measure will still be enormously popular with administrators and trustees.

“Schemes will benefit from not only the simplified processing of what will now be a stand-alone exercise, but also the saving of the disproportionate costs involved in paying very small pensions.

“And many individuals will be pleased that rather than receiving a pension often seen as hardly worth having (at less than £2 a week), they now have the chance to take a cash lump sum.

“We know that one of our larger NAPF member schemes has at least 1500 individuals with a pension entitlement below the new ‘trivial’ limit, so we believe there are tens of thousands of UK pension scheme members who will also welcome today’s Budget announcement.”



ENDS

Notes for Editors

1 Changes were introduced in the Finance Act 2004 and came into force in April 2006.



About The National Association of Pension Funds

The NAPF is the leading voice of workplace pension provision in the UK. Some 10 million working people are currently in NAPF Member schemes, while around 5 million pensioners are receiving valuable retirement income from such schemes. NAPF Member schemes hold assets of around £800bn, and account for approximately one fifth of investment in the UK stock market.

Journalists requiring further information, please contact Mark Brooks via

020 7808 1312 mark.brooks@napf.co.uk 07917 506683


Mark Brooks
Head of Press
Tel: 020 7808 1312 07917 506 683
Fax: 020 7222 7585
http://www.napf.co.uk



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