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Compliance March 15, 2006
UK Pension Officials Release Draft Plan Distribution Rules
March 15, 2006 (PLANSPONSOR.com) - In a move that
echoes regulatory developments in the US, UK pension
officials are seeking approval from Parliament for new rules
on how retirement plan participants can get a lump sum
distribution or carry out an asset transfer.
Reported by Fred Schneyer
A news release from the UK’s Pension Regulator said a draft version of the new pension distribution rules has been submitted to lawmakers and that it is scheduled for formal introduction next month.
The rules outline the distribution rights of participants leaving the plan with between three months and two years of vested service and without vested rights under the plan to have access to his or her plan assets as a lump sum or in a transfer to a new plan.
It also explains the duties trustees and pension plan managers will have under the new legislation to notify members of their rights and to facilitate their chosen option.
According to the regulator, the new document’s primary purpose is to suggest a reasonable time period within which:
- trustees/managers must notify members of their rights,
- members must respond to trustees/managers,
- trustees/managers must carry out members’ decisions, and
- trustees/managers must apply the default process, where a member does not respond to notification.
The draft rules are here .
US rollover distribution legislation was contained in the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA). (See Retirement Programs: Rollovers: Reinventing the Rollover ).