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Since 1986, most defined benefit pension schemes have been required to increase benefits for early leavers between the date of leaving and retirement age, in line with increases in the Retail Prices Index or by 5% per annum over the whole period if less.
The Pensions Bill currently working its way through Parliament is expected to reduce the limit from 5% to 2.5% per annum, but only for benefits built up after a date to be confirmed (likely to be January 2009).
This BBS briefing note reviews how the new requirements are expected to be implemented and comments on the likely funding impact for pension schemes.
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