Change in calculation basis for projections for contracted out individuals, from 6th April 2009
As you will probably be aware under the Pensions Act 2007 legislation, provision has been made for changes to the calculation method for State 2nd Pension (S2P) and to the method of calculating contracted out rebate payments for those individuals contracted out of the S2P.
This change will have an impact on the calculation basis for FSA based new and existing business projections from 6 April 2009, for certain contracted out individuals. There is no impact on projections for individuals who were not contracted out and not receiving rebate payments before 6 April 2009.
As the future levels of expected contracted out rebates for affected individuals will be lower than under the existing basis, this will have an impact on the projected figures produced for FSA based projections, for certain individuals contracted out of the S2P.
Therefore, for some contracted out individuals where the pre-sales illustration was obtained before 6 April 2009 and the plan purchased after 6 April 2009, they will see a lower projection in their post sales illustration.
The products impacted for new business only are:
- Premier Group Personal Pension
- Premier Group Stakeholder Plan
- Premier Individual Stakeholder Plan
- Flexible Retirement Plan
The products impacted for new and existing business are:
- Prudential (2000) Personal Pension Scheme (GPP)
- Prudential Stakeholder Pension Scheme (SHP)
- TUC Stakeholder Pension Scheme
- Prudential Money Purchaser Plan (101)
- Money Purchase Plan 101 Active
- Money Purchase Plan (pre101) Active
- Prudential (Corporate) Personal Pension Scheme
- Prudential Group Personal Savings Plan
- Personal Savings Plan.
We are making the appropriate changes to our systems and they will be updated for 6 April 2009.
N.B.The changes in the contracted out rebate calculations will also impact Statutory Money Purchase Illustrations (SMPI) figures for protected rights, provided on Annual Benefit Statements. However, required changes to SMPI projections come into effect from 6 April 2009 for all illustrations issued on or after 1 September 2009, so further communication regarding changes to SMPI will be issued in due course.
For more information, contact your Prudential Account Manager.
