Delivered on June 4, 2014, the Queen's Speech unveils key pension reforms. New legislation will provide "discretion over the use of retirement funds" and "allow for innovation in the private pensions market to give greater control to employees".
Pensions Tax Bill: This Bill follows the well-publicized Budget 2014 proposals and will allow individuals aged 55 or over to withdraw DC pension savings in full, subject to their marginal tax rate and the scheme rules allowing the new flexibilities. In addition, anti-avoidance provisions will be introduced to tackle the risk of individuals using the new rules for tax avoidance.
Private Pensions Bill: This Bill will facilitate 'collective schemes' that, broadly, aim to pool risk between members. Such schemes will be designed to enable greater stability and reduce investment risk in DC schemes, but without exposing employers to funding risk. As part of the new landscape, three "mutually exclusive definitions for scheme type", that are based on degrees of certainty for members and employees, will be established: Defined Benefit (DB); Defined Contribution (DC); and Defined Ambition (described as a "shared risk pension scheme").