Helm News: Pensions Bill 2013-14
The Pensions Bill 2013-14 was presented to Parliament on 9 May 2013 for what is referred to as the first reading. There was no debate on the Bill at this stage. A date has not yet been fixed for the second reading in the House of Commons.
The key measures of the Bill are as follows:
- Reform of the state pension system replacing the current two component arrangement with a single tier flat rate pension for individuals reaching State Pension Age (SPA) from 2016.
- The increase of the State Pension Age to 67 is to be brought forward by 8 years and be phased in between 2026 and 2028.
- Simplification of existing bereavement benefits through the introduction of a single Bereavement Support Payment to replace the existing three elements.
- The introduction of a system of automatic transfers allowing an individual’s pension pot to follow them to their new scheme when they change job. Only those employees moving between money purchase schemes and with pots less than £10,000 will be eligible.
- The withdrawal of the ability to offer short service (less than two years) refunds of contributions from occupational money purchase schemes with effect from 2014.
- A reduction of the frequency Scheme Returns to the Pensions Regulator are required for schemes with four or fewer members.
A number of other measures are also contained in the Bill, they include a new statutory objective for the Pensions Regulator, some strengthening of the auto-enrolment legislation and a new power to make regulations to prohibit the offering of incentives to transfer pension rights.
We will focus on each of the key measures in future publications and briefings, however we strongly recommend that those employers who have opted to use an occupational money purchase scheme as their vehicle for auto-enrolment due to the current ability to offer short service refunds (and therefore receive refunds of employer contributions), to review their approach immediately. We would be delighted to discuss your options with you if you wish.
The information in this article does not constitute advice and should be used for informational purposes only.