The Government announced today a review into the timing of the increase in State Pension age to 66.
Ensuring an equitable state pension is a key priority for the Government. We are protecting the future value of the Basic State Pension through the triple guarantee that it will be increased by the better of earnings, prices or 2.5%. However life expectancy at age 65 is increasing at a faster rate than was previously projected and we must make sure our pensions system is sustainable.
To support this review the Government has published a Call for evidence to inform an internal review. This provides an opportunity for people and organisations to submit evidence to help us reach our decision.
This Call for Evidence will close on 6 August and the response will be published in the autumn. This is to ensure that as much notice as possible can be given to those who might be affected by an earlier rise in the State Pension age than expected.
Please send your responses or any queries about this document to:
State Pension Age review team,
State Pensions Division,
Floor 5,
Section B,
Caxton House,
Tothill Street,
London, SW1H 9NA.
Email: spa.review@dwp.gsi.gov.uk
Fax: 020 7449 5896
Please ensure your response reaches us by 06 August 2010.
Workplace Pension Reforms review
24 June 2010
The Government announced today details of a review of how best to support the implementation of automatic enrolment into workplace pensions.
More detail on the review can be found on the Workplace Pension Reform page on this website.
- Workplace Pension Reforms (DWP website)
NEST Order and Rules
25 March 2010
The National Employment Savings Trust (NEST) Order and the NEST Rules were published today. They will take effect from 5 July 2010. Together, the Order and Rules set out the framework for the operation of NEST.
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Rules of the National Employment Savings Trust (1.24MB)
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Note to accompany the Rules of the National Employment Savings Trust (28KB)
Default Options in Workplace Personal Pensions consultation - government response
23 March 2010
The Government response to the consultation on the use of default options in workplace personal pensions and the use of group self invested personal pensions for automatic enrolment is published today.
State Pension Reforms - briefing pack for advisers
19 March 2010
This recently launched version 2 of the pack aims to support advisers whose customers wish to understand how they may be affected by State Pension Reforms which come into effect from 6 April 2010. The main features of the redesign are that the pack has been made interactive to aid navigation around the pages and more detailed material has been added to the appendices in the form of Knowledge Sheets. The original content has not been amended significantly.
Establishing the National Employment Savings Trust
16 March 2010
The Minister for Pensions and the Ageing Society (Angela Eagle) has today set out the Government’s plans for financing the National Employment Savings Trust NEST, which will give millions of people access to a low cost pension saving vehicle for the first time.
The Government expects NEST to achieve the Pensions Commission’s ambition of low cost scheme with a charge of 0.3% of its members’ funds under management (0.3%AMC) over the longer term. To meet the cost of establishing the scheme, NEST is also expected to initially make a small additional charge on contributions of around 2%. This will mean NEST’s members will benefit from low charges comparable to those generally only enjoyed by higher earners or working for larger firms in the market today.
NEST will be self-financing in the long-term through the charges paid by its members. But before it is fully established, it faces an inevitable gap between its costs and revenues. The Government intends to provide NEST with a loan to bridge this funding gap, in line with its commitment that the scheme be established at nil cost to taxpayers.
Read the full Written Ministerial statement.(Parliament Website)
Abolition of contracting out
12 March 2010
The Government has confirmed today that the option to contract out of the additional State Pension into a Defined Contribution pension scheme will be abolished from 6 April 2012. Individuals who are contracted-out into a Defined Contribution pension scheme will be automatically brought back into the additional State Pension from this date. We legislated for this in the Pensions Act 2007 and 2008.
NEST contract awarded
2 March 2010
Today DWP announced that the Personal Accounts Delivery Authority (PADA) intends to award the NEST (National Employment Savings Trust) Scheme Administration Services contract to Tata Consultancy Services Limited (TCS).
Read more on the Personal Accounts Delivery Authority website
A milestone for Workplace Pension Reform
12 January 2010
The final batch of regulations to deliver the ground breaking workplace pension reforms were unveiled today, reflecting the fact that the Government has worked closely with stakeholders and employers to maintain the consensus and ensure the regulations are responsive to their needs and concerns.
Today is a very important milestone for workplace pension reform, we are:
- laying regulations on the workplace pension reforms;
- publishing the Government response to the Workplace Pension Reform – Completing the picture consultation;
- publishing the regulations that will establish National Employment Savings Trust (NEST) and the corporation that will run the scheme, as well as winding up Personal Accounts Delivery Authority (PADA) from July this year; and
- publishing the associated impact assessment
- National Employment Savings Trust (NEST) (Personal Accounts Delivery Authority website)
Auto-enrolment will begin as planned in October 2012 and will be fully phased in by October 2017.
The following regulations are published today and are available on the Office of Publication Information website.
- The Occupational and Personal Pension Schemes (Automatic Enrolment) Regulations 2010: These set out the practical arrangements employers must make to automatically enrol eligible jobholders into a pension scheme, including the arrangements an individual must make if they wish to opt out of pension saving and the minimum quality standards certain schemes must reach in order to be used by employers to automatically enrol jobholders.
- The Employers’ Duties (Implementation) Regulations 2010: These set out the arrangements for implementing the new employer duties by applying the duties to employers over a period of time according to the employers’ description.
- The Employers’ Duties (Registration and Compliance) Regulations 2010: These enable the Pensions Regulator to monitor and enforce compliance with the employer duties and safeguards.
- The Public Interest Disclosure (Prescribed Persons) Order 2010: This amends an existing order to ensure that any detriment or dismissal a worker suffers as a result of making a complaint to the Pensions Regulator is unlawful.
- The Pensions Act 2008 (Commencement No. 5) Order 2010: Establishes the NEST Corporation from 5 July 2010.
- The NEST Corporation Naming and Financial Year Order 2010: Sets out the name of the trustee corporation which will run NESTand sets the financial year of the corporation in line with Government’s financial year - 1 April to 31 March.
- The NEST Order 2010: Sets up the framework for NEST, a simple, low cost scheme which employers can use to discharge their new duty.
- The NEST (Consequential Provisions) Order 2010, and The Application of Pension Legislation to the NEST Corporation Regulations 2010: Make some minor modifications to existing pension legislation in relation to the scheme through The NEST Consequential Provisions Order and The Application of Pension Legislation to the NEST Corporation Regulations, for instance, that the scheme will not have member-nominated trustees, as the members’ panel will represent the views of scheme members.
- http://www.opsi.gov.uk/si/si2010/uksi_20100009_en_1
- http://www.opsi.gov.uk/si/si2010/uksi_20100008_en_1
- The Transfer Values (Disapplication) Regulations 2010: Bans transfers of cash equivalent sums built up under other pension arrangements into and out of NEST, to ensure the scheme complements those schemes already in the existing pensions market.
- The Personal Accounts Delivery Authority Winding Up Order 2010: Winds up the Personal Accounts Delivery Authority from 5 July 2010. Transfers PADA’s property, rights and liabilities in the main to the NEST Corporation.
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Workplace pension reform – completing the picture. Government Response to the Consultation: This covers:
- arrangements for implementing the reforms;
- elements of the employer duty requirements not covered in the consultation of March 2009;
- the quality requirements for defined benefit (DB) and hybrid schemes, and transitional arrangements during implementation
- powers to enforce compliance with the requirements on employers.
- The Hybrid Schemes Quality Requirements Rules 2010 are being published in draft to help with completing the picture. Work will continue with stakeholders in developing the rules and guidance for publication later on.
- Workplace pension reform regulations – impact assessment: The impact assessment builds on the analysis presented in the Regulatory Impact Assessments that accompanied the Pensions Bill 2007 and draft regulations consultation in 2009. It presents the overall impact of the reform on employers, individuals, the pensions industry and the Government.
PDF version On 24 June 2010 the Government announced details of a review of how best to support the implementation of automatic enrolment into workplace pensions.
The Government’s coalition agreement confirmed its intention to introduce automatic enrolment. However, circumstances have changed since the Pensions Commission published its recommendations in 2005 and it is appropriate to review the position in the light of developments since then.
The review will be conducted by an independent team led by Paul Johnson of Frontier Economics, David Yeandle OBE of Engineering Employers Federation and Adrian Boulding of Legal and General Group PLC.
You can read the terms of reference for the review.
The review team will contact relevant stakeholders to let them know how they can participate and contribute to the review process. The review will conclude by 30 September.
To read more, view http://www.dwp.gov.uk/policy/pensions-reform/workplace-pension-reforms/
A BBC
report http://news.bbc.co.uk/1/hi/uk/10427052.stm
At the heart of the Treasury's recent pension proposals is a drastic reduction in the annual allowance qualifying for tax relief.
This could drop from the current £255,000 (for the 2010-11 tax year) to between £30,000 and £45,000 a year.
The practical impact is that many more people than at present may have to pay an extra tax bill each year if they wish to increase the value of their pension pots, since those exceeding the annual allowance will suffer a tax charge on the excess.
And for some, especially the self-employed with highly variable incomes, this could seem particularly unfair.
The state pension age would need to rise to 72 in 20 years' time to keep the cost to the government at the same level as in 1981.
That is the conclusion of the Pensions Policy Institute think tank in its submission to the government consultation about the issue.
It adds that people would need at least 10 years' notice of a policy change in order to adjust their retirement plans.
The pension age will rise, but there is debate over the speed of change.
To read more http://www.bbc.co.uk/news/business-11038119
More than half of all employers (56 per cent), and most eligible individuals (64 per cent), support Government plans for automatic enrolment into a workplace pension scheme from 2012, new research from the Department for Work and Pensions (DWP) has found.
The Government is taking action to encourage more people to save. Seven million people are currently not saving enough to deliver the pension income they are likely to want, or expect, in retirement, and 2.5 million fewer employees are saving in a private sector occupational pension than in 1995.
DWP Minister Lord Freud said:
"With only around half of employees saving into a workplace pension, our planned reforms are needed to prevent millions of Britons facing a penny-pinching retirement.
"It is encouraging that, despite the recession, the majority of employers are still in favour of pension savings. We will work with business and the industry to make automatic enrolment work, so we can give millions more people the chance to save, and an independent review team is currently looking at how we get the details right.”
Most employers already making pension contributions of three per cent or more expect to maintain or increase their level of contribution when they have to provide pensions for all their staff.
While 94 per cent of employers contributing at least 3 per cent say they will maintain or increase levels for existing members, 81 per cent say they will offer existing contribution levels or higher to non members and new employees.
Most workers who are eligible also support the reforms. They say that if they were automatically enrolled into a workplace pension scheme tomorrow they would expect to stay in the scheme.
90 per cent say the employer contribution is attractive. 75 per cent said they could afford to put four percent of their wage into a workplace pension, and around half of those who expected to remain saving after automatic enrolment said they were likely to contribute more than four per cent of their pay.
The Government announced an independent review of how to make auto-enrolment work on Thursday 24 June. A team of three independent experts will report back in the autumn.
Notes to Editors:
- Employers attitudes and likely reactions to the workplace pension reforms 2009: Report of a quantitative survey’ is available at: http://research.dwp.gov.uk/asd/asd5/rports2009-2010/rrep683.pdf
- The research comprises a nationally representative survey of 2,550 private sector employers, with one or more employees, in Great Britain. Interviews were carried out with those who were responsible for making decisions about pension arrangements. It was conducted by TNS-BMRB and NIESR on behalf of DWP.
- ‘Individuals attitudes and likely reactions to the workplace pension reforms 2009’, published in July, is available at http://research.dwp.gov.uk/asd/asd5/rports2009-2010/rrep669.pdf
- The findings are drawn from the National Centre for Social Research analysis and based on face-to-face interviews with 1,027 individuals eligible for automatic enrolment. The research was conducted by the National Centre for Social Research on behalf of DWP.
- The workplace pension reforms, set out in the 2008 Pensions Act and Workplace Pension Reform Regulations 2010, will require employers to automatically enrol all eligible workers aged between 22 and state pension age into a qualifying workplace pension scheme, unless the worker chooses to opt-out. Employers may choose either to enrol them into an existing pension scheme which meets or exceeds the minimum requirements set out in the reforms; amend their existing scheme to meet the qualifying standards, set up a new qualifying scheme, or enrol them into the National Employment Savings Trust (NEST).
http://www.dwp.gov.uk/newsroom/press-releases/2010/aug-2010/dwp113-10-24...
Publication of DWP research report 687: Employers’ Pension Provision Survey 2009
Today, the Department for Work and Pensions publishes the findings of research exploring the extent and nature of pension provision among private sector employers in Great Britain in 2009. This was the eighth survey in the series.
The key findings of the report were as follows:
- In 2009, pension-providing organisations employed just over four-fifths (82 per cent) of all employees in the private sector.
- The percentage of all private sector firms making some form of pension provision appeared to decline between 2007 and 2009, from 41 per cent to 28 per cent.
- Most of the decline in overall provision was due to a reduction in the provision of contributions to employees’ private personal pensions. If one excludes employers’ contributions to employees’ personal pensions the findings show a decrease in employer provision from 33 per cent to 27 per cent.
- Workplace-based stakeholder pension schemes continued to be the most common form of provision, provided by 23 per cent of all firms. Five per cent provided group personal pensions, five per cent made contributions to employees’ personal pensions and two per cent provided occupational schemes. Less than one per cent made contributions to employees’ private stakeholder pensions.
- Just over one quarter (27 per cent) of private sector employees were active members of work-based pension schemes with 13 per cent of all private sector employees belonging to occupational schemes.Only nine per cent of non-providers expected to introduce pension provision in the next five years. The most commonly cited reasons for non-provision were: the organisation was too small (36 per cent of non-providers), pension provision was too costly (15 per cent of non-providers) and staff did not want it (13 per cent of non-providers).
Notes to Editors:
- DWP Research Report No. 687 – “Employers’ Pension Provision Survey 2009” is published today, 21 September by DWP.
- The research was conducted on behalf of DWP by TNS-BMRB. Data analysis and reporting was undertaken by the National Institute of Economic and Social Research (NIESR).
- The research and summary are available free on the DWP website http://research.dwp.gov.uk/asd/asd5/rrs-index.asp
- The report is based on telephone interviews with 2,519 private sector employers.
http://www.dwp.gov.uk/newsroom/press-releases/2010/sep-2010/dwp120-10-21...
When the country is celebrating the Olympics in 2012, baby boomers will be turning 65 in record numbers. Over 800,000 of them - a staggering 150,000 more than in 2011 – will reach this key milestone. This massive increase corresponds to the post-war spike in births in 1946 and 1947, and presents a challenge for the Government as many of those turning 65 will also start claiming their state pension.
Since the first of the baby boomer generation started to draw their pension at age 60 in 2005/06, DWP spending on people over working age has risen by almost £14 billion. By 2012 spending will have risen by nearly another £4 billion.
Pensions Minister Steve Webb visited older workers at Marks & Spencer in Liverpool today. He said:
“People are now living longer, healthier lives and most 65-year-olds can expect to live until their late 80s. State Pensions need to reflect this and we need to make sure that the system is sustainable in the face of increasing longevity.
“We also want to make sure that where older workers want to keep working, they don’t find themselves pushed out of the workplace or experience age discrimination.”
With the latest research showing that many people can expect to spend around 20 years in retirement, the Government is currently looking into bringing forward increases to the state pension age. It also wants to ensure that older workers who want to keep working are able to do so, by phasing out the Default Retirement Age.
The three urban areas that will see the greatest increase in 65-year-olds over the next two years are Aberdeen (33%), Hull (30%) and Kingston upon Thames (26%).
Notes to Editors:
- The number of 65-year-olds in Britain will increase by around 150,000 between 2011 and 2012 – that’s those born in the latter half of 1946 and the first half of 1947, corresponding with the post-war spike in births.
- In 2010, 646,000 people will turn 65, an increase of around 6,000. Next year 658,000 people will hit 65, an increase of 12,000. In 2012, 806,000 will reach the milestone age, an increase of around 150,000.Whereas back in 1946 and 1947 65-year-olds could expect to live another 13 years, 65-year-olds today can expect to live another 23 years.
- In 2030, there will be 5.2 million more people aged over 65 compared to 2010.
- The review on the timing of the increase in State Pension age to 66 commenced on the 24th June, with the publication of a “Call for Evidence” from external stakeholders to help inform the review and the decision.
- The six week evidence gathering period for the Call for Evidence closed on 6th August 2010. 352 responses have been received from individuals and 46 responses have been received from organisations.
- The Government’s decision is to be announced later this autumn, with the Bill to implement the decision introduced early in the New Year.
http://www.dwp.gov.uk/newsroom/press-releases/2010/sep-2010/dwp121-10-21...
24 June 2010 – Duncan Smith and Webb: We will reinvigorate retirement
Iain Duncan Smith and Steve Webb today outlined the bold steps they plan to take to fundamentally reform and repair Britain’s outdated and inadequate pension system.
Following the confirmation that the State Pension will be linked once again to earnings, Iain Duncan Smith used his speech to set out how the Coalition Government planned to reinvigorate retirement by helping millions of Britons to get back into a savings habit that has declined over the last decade.
Secretary of State for Work and Pensions, Iain Duncan Smith said:
Speaking alongside his Departmental colleague, Pensions Minister, Steve Webb said:
This radical agenda will be driven by:
Restoring the link between the State Pension and earnings from 2011
A call for evidence from the public and interested parties on raising the state pension age to 66
Consulting on how we will quickly phase out the Default Retirement Age
An independent review of how to make auto-enrolment work
A team of three independent experts will spend three months looking at how to make automatic enrolment work before reporting back to Government in the autumn.
Team leader, Paul Johnson said:
Alongside the announcement the Department published its call for evidence about the right point at which the state pension age should rise to 66 for both men and women.
Notes to Editors:
1. "When should the state pension age increase to 66? – A Call for Evidence" is published at www.dwp.gov.uk/policy/pensions-reform/latest-news
2. The three experts that will review automatic enrolment are:
Paul Johnson
Paul Johnson is a senior associate at Frontier Economics and a Research Fellow at the Institute for Fiscal Studies. He has worked in the economics of public policy for 20 years including stints as a director at HM Treasury, Chief Economist at the Department for Education and Skills and Deputy Director at the IFS. Paul has been deputy head of the Government Economic Service and a council member of the ESRC. He has also researched and published widely on pensions and is a member of the council of the Pensions Policy Institute.
David Yeandle OBE
David Yeandle is the Head of Employment Policy of EEF, the manufacturers’ organisation, and his main responsibilities are representing EEF’s policies on employment and pensions to the Government and European Union. Before joining EEF in 1995, David worked for the Eastern Electricity Board and Pirelli Cables where he held a number of personnel roles and was Personnel Director from 1989. David is on the Council of the Pension Policy Institute (PPI) and was a member of the independent Pension Provision Group which advised the previous Government.
Adrian Boulding
Adrian Boulding is an actuary with 30 years experience in the field of retirement provision, including working on all types of pension schemes. Currently he is Pensions Strategy Director at Legal & General. Adrian currently sits on the Pensions Committee at the Association of British Insurers, the Retirement Council at the Tax Incentivised Savings Association and the External Affairs Committee at the Pensions Management Institute.
3. Details of the automatic enrolment review are at: www.dwp.gov.uk/policy/pensions-reform/workplace-pension-reforms
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