NAPF has responded to the DWP consultation on the changing definition of "money purchase benefits". In our response, we have repeated our warning that application of the new definition retrospectively will be disruptive, and have explained why the 75 new regulations being proposed by the Government are confusing and will discourage employers from risk sharing.
In its response, NAPF has noted some of the high level problems posed by the draft regulations. It is ironic, in view of the “Defined Ambition” consultation running concurrently with this one, that these new regulations will cause the most difficulty for the schemes that introduced some limited risk-sharing. The schemes that are affected are those where the employer guaranteed a minimum investment return; or provided an underpin to a money purchase promise; or allowed members’ voluntary contributions to be paid along with their defined benefit pensions as income from the scheme at a better rate than an insurance company would give them.