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Common concerns

Changes to your pension

Over the lifetime of your pension, it's possible that your employer or trustees may want to make changes to your pension scheme. If this happens, you should be consulted if the changes affect how you build up pension – see “what you must be told – about changes to your pension. ” Unless you agree, any change should not alter the benefits you have already built up. In addition to various pieces of legislation, the rules of your scheme will outline what your provider can and can't do.

The power to make changes in your scheme rules

If you're a member of a defined benefit scheme, the power to make changes should be set out in your scheme’s rules. It's important the rules are followed.  If they are not, the changes may be invalid. Similarly, any changes shouldn't breach the terms of your employment contract. If you're unsure what the rules of your scheme are, it's a good idea to contact your pension scheme administrator to get a copy.

 

Section 67 of the Pensions Act 1995

Section 67 of the Pensions Act 1995 applies to all occupational pension schemes with more than one member. It set outs limits on what type of changes can be made. In broad terms, unless you give your written consent any changes can't worsen benefits you’ve already earned.

Section 67 describes changes as:

  • Protected modifications
  • Detrimental modifications

A protected modification is a change that would result in a members' or survivors' subsisting rights being replaced by money purchase benefits, or would reduce pensions being paid.

Subsisting rights are benefits which members (and their survivors) have already built up under a pension scheme’s rules.

A detrimental modification is a change which would adversely affect members' or survivors' pension subsisting rights.

A protected modification can only be made with the consent of the member. A detrimental modification can be made without consent as long as the scheme’s trustees have obtained a statement from an actuary stating the value of benefits already earned will be the same or greater after the change. 

In both instances you should be consulted before the changes are made – see “what you must be told – about changes to your pension.” 

 

Frequently asked...

Where can I find out more?

If you need more information, please contact us. A pension specialist from our team will be happy to help with whatever pensions-related question you have. Our help is always free.

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