The rules for occupational schemes allow trustees to refund member contributions if they are a member of the scheme for three months or less. Standard says the employer also gets a refund of their contributions if they exercise the loophole. After the member has been in the scheme for 3 months or more but less than two years, the trustees must offer a transfer value, includes the value of the member’s contributions, employers contribution, investment return and effect of charges, and a refund of member’s contributions. If the ex-member takes a refund of contributions, the employer contribution is also refunded to the employer.
John Lawson, head of pensions policy at Standard Life says: “Occupational money purchase pension schemes should have the same immediate vesting rules as personal pensions and stakeholder schemes.”