Commutation meaning

THIS CHECKLIST APPLIES TO TRUSTEES OF PRIVATE SECTOR DEFINED BENEFIT OCCUPATIONAL PENSION SCHEMES This Checklist has been archived. It summarises the actions DB trustees needed to take in the run-up to 6 April 2015, and afterwards, to accommodate the pension flexibilities (also called pension freedoms) introduced on 6 April 2015. For more about the nature of those reforms, see Practice Note: Pension freedoms—an introduction [Archived]. In this Checklist, ‘DB trustees’ denotes the trustees (or managers) of arrangements other than those providing flexible benefits, i.e. excluding: money purchase arrangements cash balance arrangements other arrangements that typically require an individual to buy an annuity Note that the additional voluntary contribution (AVC) facilities of defined benefit schemes do, in effect, amount to arrangements offering flexibilities. The issues set out in Pension flexibilities: steps for DC trustees to take—checklist [Archived] are therefore relevant to trustees of such schemes, but only to the extent that the AVC facilities are concerned. Preliminary steps ...

FORTHCOMING CHANGE 1 : Section 10 of the Finance Act 2022 will raise the normal minimum pension age (NMPA) from 55 to 57 on 6 April 2028, except for members of the firefighters, police and armed forces public service pension schemes. This increase applies broadly across registered schemes, subject to the stated exemptions. The same Act will also permit members of registered pension schemes to access benefits before 57 where, on or before 4 November 2021, they either held an ‘unqualified right’ to draw benefits, or were already engaged in a substantive transfer to a scheme providing an unqualified right to a protected pension age below 57 on or before 4 November 2021. To rely on this new protection applying in 2028, the scheme’s rules must, as at 11 February 2021, have contained an unqualified right to take entitlement to scheme benefits before age 57. For more detail, see Practice Note: Increasing the normal minimum pension age (NMPA) to 57—pensions impact. FORTHCOMING CHANGE 2 : The Pension...

ARCHIVED This Practice Note, kept for reference only, sets out the statutory and regulatory amendments — including revisions to the FCA Handbook — that implemented the pension freedoms taking effect on 6 April 2015. Preparatory actions undertaken before 6 April 2015; Changes introduced on the day itself; and Subsequent technical tweaks to better realise the pension freedoms. The Note is not maintained and is supplied solely for information. From 6 April 2015, the pension freedoms permitted those with flexible benefits (that is, money purchase or cash balance benefits) to access their pension savings more readily from age 55, either through drawdown or by taking one or more cash payments called uncrystallised funds pension lump sums (UFPLS). For further details, see Practice Note: Pension freedoms—an introduction [Archived]. How were the pension freedoms implemented?...

Defined benefit (DB) pension scheme deficit A defined benefit (DB) pension scheme is in deficit when the value of its assets falls short of its liabilities. There are several ways to assess the shortfall, for example: on the scheme funding basis — required by the Occupational Pension Schemes (Scheme Funding) Regulations 2005, SI 2005/3377, and used to determine future contributions. If a shortfall is identified on this basis, the trustees and sponsoring employer must agree a recovery plan to clear it. For further information, see Practice Note: The scheme-specific funding regime — Recovery plan on a solvency basis — liabilities measured as the premium an insurer would need to secure the scheme benefits in full (the ‘buy-out basis’) on the Pension Protection Fund (PPF) basis — assets and liabilities valued using standard assumptions and the benefit structure set by the PPF on an accounting basis — assets and liabilities measured as required by an accounting standard For further information,...