The Pensions Bill has just one stage to be completed in the House of Lords (Third Reading, on 27 April) before the House of Commons begins to consider it. Very few amendments have been made to the Bill so far. Key measures which are likely to be of greatest interest include:

Automatic enrolment

  • Increase of lower earnings threshold: jobholders with earnings higher than the income tax personal allowance (£7,475 for 2011/12) will have to be automatically enrolled; this figure is increased from £5,035, which is still the minimum level of earnings on which contributions will be payable; without this change, if a jobholder earned £5,036, contributions would have been payable on earnings of just £1.
  • Introduction of an optional waiting period of up to three months before automatically enrolling a jobholder (subject to giving notice to the jobholder) – but only once in any 12-month period to prevent the use of serial three-month contracts by employers.
  • Alternative quality requirement for employers' DC schemes: where an employer wishes to use its DC scheme for automatic enrolment, instead of meeting the basic requirement of minimum three per cent employer contributions and total contributions of eight per cent it can meet a more flexible requirement of:
    • Minimum four per cent employer contributions; total nine per cent;
    • Three per cent/eight per cent and pensionable pay is at least 85 per cent; or
    • Total contributions at least seven per cent, and 100 per cent of pay is pensionable.  

Indexation and revaluation: CPI

References to RPI in a number of statutory provisions are to be replaced by references to “the general level of prices in Great Britain”, which is to be based on CPI: see our briefing of January 2011.

Payments to employers

The legislation on payments to employers from occupational pension schemes is clarified and the deadline for trustees to pass resolutions is extended to April 2016: see Pensions Update, January 2011.

State pension ages

The equalisation of state pension ages is accelerated so that for both sexes it will be:

  • Age 65 by November 2018 (formerly April 2020);  
  • Age 66 by April 2020 (formerly 2026).

For more on changes to the state pension, see the state pension reform article below.