The U.K. government will allow private-sector defined benefit plan participants to transfer to newly flexible defined contribution plans, said Chancellor of the Exchequer George Osborne.
In the government's response Monday to a consultation into changes announced in the U.K. budget in March, Mr. Osborne wrote: “I want as many people as possible to be able to access their pension flexibly. That is why the government has decided to continue to allow those saving into private-sector defined benefit pension schemes to transfer to defined contribution schemes, subject to new safeguards which are designed to protect the best interests of the saver and the scheme.”
He added that, for most DB participants, the right decision will be to remain within their fund, but that the government agrees with a number of industry representatives — such as the National Association of Pension Funds — that the existing freedom to transfer out must remain.
Individuals also will have to wait a further two years before accessing their private pension savings, starting in 2028. Currently participants can take their savings at 55, but the new tax rules — which also abolish a 55% tax on withdrawing all funds — extend this to the age of 57.
The government also reiterated the need for free, impartial and independent guidance for participants.