The Chancellor has made a number of announcements in his Autumn Statement which will have an impact on the UK pensions regime. Among the most significant points are:
- The basic state pension is set to rise in 2013 by 2.5% to £110.15 a week.
- The annual allowance for tax-free pension contributions, which was reduced from £255,000 to £50,000 with effect from April 2011, is to be reduced again to £40,000 from 2014-15.
- At the same time, the lifetime allowance will be reduced from the current figure of £1.5m to £1.25m.
- 'Super-long' gilts are set to be introduced, with the current cap on maturities of 50 years being removed following a Government consultation on the matter.
The Government has also announced that it will begin a consultation in the new year on the discount rates applied in calculating defined benefit pension scheme assets and liabilities. The proposed alternative approach will allow 'smoothed' discount rates and asset values to be applied to such calculations, which could, in many cases, lead to reduced scheme liabilities and deficits. The Government will also consult on whether to adopt a new statutory objective for The Pensions Regulator, which would require it to take account of affordability issues. In a related statement, The Pensions Regulator has encouraged trustees and pensions professionals to engage in this consultation process. To view the statement, please click here.