Government changes to pension regulations have not had the expected benefit for charities, sector experts have said.
In April last year, the Department for Work and Pensions introduced “section 75” rule changes for employers with staff in multi-employer pension schemes.
The changes were designed to enable employers like charities to leave unaffordable pension schemes more easily, allowing them to delay payment of a one-off “exit fee” which is required to leave such a scheme.
However, CFG’s sector specialist David Ainsworth and David Davison, director at Spence & Partners, say that charities’ take up of this deferred debt arrangement (DDA) has been “modest” since it was introduced.
Writing for Charity Finance magazine, they said: “To date, schemes have either tended to proceed as if the changes had not been made or to use the DDA to focus almost exclusively on what additional security they can extract from charities.
“It will be largely up to employers to make proposals to schemes and to try to force their hand, but the position to date has been highly disappointing.
“CFG is keen to seek feedback from charities trying to make use of DDAs, and will continue to lobby schemes to take them up, but progress is likely to be gradual.”
Subscribers to Charity Finance magazine can read the full article here.