24 March 2004 - Wicks - helping DC scheme members make the most of their pension
The Government are considering whether to remove Limited Price Indexation from defined contribution schemes in order to help scheme members make the most of their pension.
Speaking today at the Institute of Economic Affairs Conference, Malcolm Wicks, Pensions Minister said:
“As the cost of DC indexation falls on the individual saver, LPI affects the size of the annuity they have to purchase, leaving many with a lower starting pension than would otherwise have been the case.
“The annuity choices that people make affect their income in retirement and therefore their quality of life. It is vital that we promote a better understanding of the choices that individuals need to make about annuities.
“We know that the removal of LPI on DC schemes would be welcomed by many scheme members and many within the pensions industry. We have always said that we welcome contributions and advice and are prepared to listen. That is why we will be giving this issue our careful consideration.”
Notes for editors
- LPI applies to pensions in payment in occupational pension schemes which are tax approved, but only to those rights accrued on or after 6th April 1997. In personal pension schemes only the protected rights element built up since 6 April 1997 is subject to LPI.
- LPI was introduced to provide protection against inflation for those people whose schemes did not increase pensions annually on a voluntary basis.
- Malcolm Wicks, Pensions Minister was speaking 9:10am at the Institute of Economic Affairs Conference, Marriott Hotel, 10/13 Grosvenor Square, London. Copies of the speech are available upon request.
- For further information please contact Vicki Kennedy on 020 7238 0640.
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