On 25 July I announced that Chris Lewin and Ed Sweeney, who had been appointed as external reviewers to the Deregulatory Review in December 2006, had published their report "Deregulatory Review of Private Pensions". Their report made a number of recommendations for change. We are grateful to Chris and Ed for their thorough and thoughtful report. I am today placing copies of our response in the Libraries of both Houses.

While the Government are committed to reducing burdens on employers who provide pension schemes, they also recognise the need to strike a balance with the need to protect members' benefits. We therefore agree with the reviewers' recommendation that no changes should be made which would adversely affect current pensioners or past service rights that have already been built up.

The Government believe that proposals outlined in our response to the recommendations made by the reviewers strike the right balance between encouraging employer provision of pensions and protecting members' benefits. They will reduce costs and will make it easier for scheme rules to be changed to mirror relaxations to specific requirements. Some employers have asked for 'Limited Price Indexation' but our view is that it would not strike the right balance with the interest of members of schemes and we cannot support it.

We want to seek further views from stakeholders on these proposals before we introduce any changes, so there will be a short period of consultation on proposals to:

Reduce the cap on the revaluation of deferred pensions so that the maximum increase required in the value of pension rights - between a member ceasing to build up any more rights in the scheme and their scheme retirement age would be 2.5 per cent. annually . The current cap is 5 per cent.

Introduce statutory overrides to enable scheme rules to be amended to take advantage of the measures in the Pensions Act 2004 which reduced the cap for annual increases to pensions derived from benefits accrued since 2005 from 5 per cent. to 2.5 per cent. and to make amendments to reflect any change to the cap used for the revaluation of deferred pensions.

The consultation period will end on 15 November.

We also accept that there is scope for more work on other issues and as part of a rolling programme of deregulation will explore the following areas:

The circumstances in which an employer leaving a multi-employer scheme must make a payment to the scheme under the Employer Debt Regulations.

A move to principles-based legislation, starting with the rules around the disclosure of information to members.

Employer concerns about the existing rules on surplus funds in defined benefit schemes.

We will repeal the complex legislative requirements which apply to "safeguarded rights" which arise following pension sharing on divorce or dissolution of a civil partnership.

The Government's response will be available on the Department's pension's reform internet site later today.

http://www.theyworkforyou.com/wms/?id=2007-10-22a.2WS.5