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Pensions
Government Proposes Universal Pension
In the 2012 Budget (21 March 2012), the government announced it would legislate for a single tier universal pension in the next Parliament. Is is intended that this will replace the basic state pension, additional earnings-related pension and the pension credit and the new pension would be set at about £140 in today’s terms.
Increase to State Pension Age
There are plans to increase the state pension age.
The Pensions Act 2007 allowed for an increase in the state pensionable age “progressively over a period of 22 years beginning with 6th April 2024”.
The Pensions Act 2011 brings this forward and there will be a gradual increase in the State Pension age from 65 to 66 by April 2020, starting in December 2018.
On 29 November 2011, the Government announced that it will raise the State Pension age to 67 between April 2026 and April 2028.
Pensions: Employers’ Duties (Implementation) Regulations 2010
These Regulations set out the dates from which employers have a duty to arrange for jobholders to become active members of automatic enrolment pension schemes.
It is expected they will come into effect from 1 September 2012.
Phasing In
· Changes will be phased in over a period from 1 October 2012 to 1 September 2016.
· The changes start with the largest Employers.
· On 28 November 2011, the Government announced that small businesses will be given additional time to prepare for automatic enrolment. Under the revised timetable, small business will begin automatically enrolling their staff in May 2015, instead of April 2014. The Government will be updating the implementation timetable.
Transitional Periods
The Regulations also set out the transitional periods for
· money purchase
· personal pension schemes
· defined benefits
· hybrid schemes
to ensure they meet the requirements of the Pensions Act 2008.
LINK
http://www.opsi.gov.uk/si/si2010/uksi_20100004_en_1
Pensions Act Update
From Autumn 2012, the Government proposes to provide access to a private pension to:
all employees aged between 22 and State retirement age, and
who are earning more than £5000 a year,
and are not currently enrolled in a workplace pension scheme.
There will be a system of automatic enrolment (see above), this will mean that, instead of choosing whether to join a workplace pension scheme provided by their employer, all eligible employees will have to actively decide not to be in a scheme if they feel it isn’t right for them.
Contributions
Qualifying employers will be required to contribute a minimum of 3% (on a band of earnings).
Employers will contribute 4%.
Approxmately 1% from the Government in the form of tax relief.
If the Employer does not already offer a suitable workplace pension scheme, employees will be enrolled in the Government’s new low-cost saving vehicle, the personal accounts scheme.
The Government also plans to introduce a number of State Pensions simplification measures.
Phasing In Period
The duties will be phased in over a period from 1 October 2012 to 1 September 2016, starting with the largest employers.
Further Information
Link to regulations: http://www.opsi.gov.uk/si/si2010/uksi_20100004_en_1.
USEFUL WEBSITE
Business link
For practical advice on what you need to do now and the reforms, visit the business link website.
Page last edited: 14 May 2012
