{"id":49088,"date":"2014-10-22T12:19:22","date_gmt":"2014-10-22T12:19:22","guid":{"rendered":"http:\/\/mostafa.openonline.co.uk\/?guid=f170d9654037129834df4fd9e888c829"},"modified":"2014-10-22T12:19:22","modified_gmt":"2014-10-22T12:19:22","slug":"press-release-further-boost-to-workplace-pension-saving-with-abolition-of-short-service-refunds-from-next-year","status":"publish","type":"post","link":"https:\/\/mostafa.openonline.co.uk\/?p=49088","title":{"rendered":"Press release: Further boost to workplace pension saving with abolition of ‘short service refunds’ from next year"},"content":{"rendered":"
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With more than 4.7 million people now automatically enrolled into workplace pension schemes, the change represents a further measure to boost pension saving and make sure today\u2019s workers can look forward to comfort and prosperity in retirement.<\/p>\n

The move also lays the ground for wider government plans to make workplace pension saving easier by introducing automatic transfer arrangements for people who change employer during the course of their career.<\/p>\n

The government intends to bring in in the new measure from October 2015.<\/p>\n

Pensions Minister, Steve Webb MP, said: <\/p>\n

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The days of people spending their entire career with one employer are largely over. Today, the average Briton has 11 different jobs in their lifetime and we need the rules to reflect this reality.<\/p>\n

If people change jobs regularly and \u2018cash out\u2019 their pension each time, they stand no chance of building up a decent pension pot. By abolishing short service refunds and developing plans for automatic transfers to help people keep track of their savings, this government will build on its excellent record of helping millions of people save more for a brighter, more comfortable retirement.<\/p>\n<\/blockquote>\n

Under current arrangements, a member of an occupational pension scheme who leaves having completed more than 3 months but less than 2 years\u2019 qualifying service may be entitled to receive a short service refund. Sometimes this is optional while in other cases an employer may insist on the refund being taken or a transfer being made to another scheme.<\/p>\n

Money purchase occupational pension schemes currently make around 20,000 short service refunds every year, a figure which was forecast to grow with the continuing roll-out of automatic enrolment.<\/p>\n

But this new government action will put a stop to these refunds, ensuring money saved into a pension scheme stays there and is invested for its intended purpose \u2013 adding to the saver\u2019s overall pension pot.<\/p>\n

The government intends that, from October 2015, schemes will only be able to make refunds within the first 30 days of membership. Defined benefit occupational pension schemes and personal pension schemes are not affected.<\/p>\n

More information<\/h2>\n

The government made provision for the abolition of short service refunds in section 36 of the Pensions Act 2014<\/a>. This amends section 71 of the Pension Schemes Act 1993.<\/p>\n

The government now aims to make a commencement order to bring the change into force from October 2015.<\/p>\n

Pension schemes will still be able to offer those who have joined through their contract of employment to receive a refund of their contributions if they leave within the first month. This means there will be broad parity between these \u2018contract joiners\u2019 and those automatically enrolled into occupational pensions.<\/p>\n

Defined benefit occupational schemes will retain the facility to make short service refunds as these will not be within the scope of automatic transfers. Personal pension schemes are not affected by this policy as they have never had the facility to make short service refunds.<\/p>\n

Contact Press Office<\/h2>\n

Media enquiries for this press release \u2013 0203 267 5106<\/p>\n

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Press Office<\/h3>\n
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\nCaxton House
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\nTothill Street<\/span>
London<\/span>
SW1H 9NA<\/span>\n<\/p>\n

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\n London Press Office (national media and London area enquiries only \u2013 not questions about personal claims)<\/span>
\n 020 3267 5144\n <\/p>\n

\n Out-of-hours (journalists only)<\/span>
\n 076 59 108 883\n <\/p>\n

\n England and Wales (local media enquiries)<\/span>
\n 029 20 586 then 097 or 098 or 099\n <\/p>\n

\n Scotland (local media enquiries)<\/span>
\n 0131 310 1122\n <\/p>\n<\/p><\/div>\n<\/p><\/div>\n<\/p><\/div>\n<\/div>\n

Follow DWP on:<\/p>\n