PENSIONS ACT RECEIVES ROYAL ASSENT
09 Nov, 2011
The Pensions Bill has received Royal Assent, following months of debate since its publication at the beginning of the year. As a result, the Pensions Act 2011 will have far-reaching effects impacting several aspects of UK pension provision.
The key areas of change include the state pension age; for women, this will rise to 65 years of age by November 2018, and a further increase to 66 will be phased in resulting in the State Pension Age (SPA) will be 66 for both men and women by October 2020.
Further changes include the indexation and revaluation of pensions, with a change from RPI to CPI and the narrowing of the definition of ‘money purchase benefits’ – if the provision of benefits may potentially cause a scheme to be in a funding deficit, such benefits cannot be defined as money purchase benefits any longer.
In addition, the Act has amended some provisions for auto-enrolment, which previously existed under the Pensions Act 2008, including the raising to £7,475 per annum of the minimum level of earnings for a worker to be auto-enrolled in to a pension scheme and a three month period during which the employer may defer an employee’s enrolment in to a pension scheme.
The final details of the Act are not expected until late 2011 or early 2012. However, Lord Freud, speaking as part of the DWP’s ministerial team, said: “We currently plan to move along the timetable as set out.” This ends any speculation that the reforms may be delayed and lawyers are warning that employees should start preparing for them as soon as possible.