To bring them into line with new legislation and lift restrictions on the scheme the National Employment Savings Trust (NEST) is consulting on proposed changes to its rules.
The proposed changes included in the Rule change consultation 2016 would allow NEST’s rules to be updated so that lump sums and partial lump sums could be paid as benefits. This would be in line with the new pension freedoms introduced in April 2015.
Also, under consideration is the removal of annual contribution limits and the restriction on bulk transfers all of which come into effect in April 2017.
To include a provision that will allow the trustee to accept bulk transfers as well as amending its rules to reflect other changes are proposals to be considered during the consultation period. Within the consultation is a further proposal this will be the introduction of partial uncrystallised funds pension lump sum (UFPLS) that will be available from September this year. This will allow members to withdraw sums that are lower than the value of their pot. There will however, be restrictions and which will be one of three ways.
By introducing UFPLS with restrictions, it is likely that a situation will be created whereby the member who is in receipt of the contributions could be forced to close their account. This would, in turn, lead to them losing out on any future employer contributions.
NEST, is considering an option to leave the member’s account open in these cases.
A further proposal within the consultation is a change in the rules that will see the trustees given power to make one-off lump sums or a series of partial lump sum of a UFPLS.
There is a proposal of a new rule that will allow member’s continuation of receiving contributions even after their pot has been completely cashed out.
Further changes also include a requirement that trustee maintain a “general account”, this will allow for money that is not attributable to a member’s account to be allocated as a pot that would be used for potential compensation, administration and any other payments as determined by the trustee.
Granted to trustees will be a “general power” that allows them to pay lumps sums as benefits.
The consultation runs from 20 January to 21 March 2016.
