The abolition of contracting out on a defined contribution (DC) basis may lead to unintended consequences. Indeed, following the Department for Work and Pensions’ consultation on the subject, Ray Chinn, LV= head of pensions, says: “We are pleased that the government has confirmed the abolition date of 6 April 2012 for contracting out on a defined contribution basis, and we support the draft legislation in the main. But we are concerned that a consequence of this legislation would stop most transfers from defined benefit (DB) schemes to DC schemes.”
He adds: “We strongly believe that legislation should be drafted so that transfers from DB to DC schemes should still be permitted.”
While in many cases it is sensible for people to remain within a DB scheme, there are still a number of circumstances where a transfer is the right thing to do, and the right to such transfers should therefore not be prohibited, for example:
Author: Pensions WorldPensions World is the leading monthly magazine for pensions professionals published by LexisNexis.