The Pensions Bill 2013-14 received royal assent on 14 May and is now the Pensions Act 2014. The Act includes, in brief:
- The introduction of a single tier state pension from 6 April 2016, which will be accompanied by the abolition of contracting out on a salary related basis for pension schemes2. The Government has also been consulting on provisions enabling employers to make certain amendments to their pension schemes to compensate them for the increase in national insurance contributions resulting from the abolition (see below);
- An outline of the provisions dealing with the automatic transfer of members' small pension pots between workplace money purchase pension schemes in certain prescribed circumstances;
- A new statutory objective for the Pensions Regulator which applies in relation to scheme funding only and is 'to minimise any adverse impact on the sustainable growth of an employer'. This provision took effect from 14 July and the Regulator's revised code on scheme funding (published on 10 June) has also come into force on 29 July;
- Provisions which will allow the Government to introduce further legislation to restrict or prohibit certain charges in relation to defined contribution pension schemes that can be imposed on members, and to legislate to impose governance and administration requirements on certain pension schemes;
The Act also covers a number of further measures, which include the vesting of defined contribution benefits after 30 days' qualifying service in occupational pension schemes for new actives/certain re-joiners going forwards, provisions enabling the secretary of state to regulate to prevent persons from offering incentives to members of defined benefit pension arrangements to transfer out, and certain technical changes in relation to automatic enrolment (e.g. introducing a power to make regulations introducing automatic enrolment exemptions).
For the most part, the provisions of the Act have not come into force straight away and indeed will only do so when an order is made (dates to be confirmed). However, the Act lays down the necessary legal framework for some important changes that are either being or have been consulted upon and are likely to be further legislated upon in the near future.