Pensions bill receives royal assent: our coverage of the changes

The act had its first reading in the commons in May 2013, just over a year ago, you can see the progress of it here.  

The main provision of the act is the introduction of the single-tier state pension, which will replace the current state pension and additional state pension with a flat-rate pension.

In April of last year we reported that the government's plans for a single-tier pension would encourage more focused thinking from employers on managing the end of contracting out.

The act also introduces pot-follows-member. It sets out a framework for the automatic transfer of small pension pots when an individual changes jobs. 

Jeffrey Mushens, technical director at Tisa Exchange, and James Markham, managing director of SBC Systems, discussed in an April edition of The Review how technology can help schemes implement pensions consolidation, with both favouring a structure that places the burden on the receiving scheme.

More powers have been given to the Department for Work and Pensions, allowing it to make regulation restricting charges and imposing requirements relating to administration or governance. 

In March, pensions minister Steve Webb announced that a charge cap of 0.75 per cent of funds under management within the default funds of qualifying defined contribution schemes would be introduced from April 2015. 

At the time, Adrian Boulding, head of strategic policy at insurer Legal & General, said: “What we really need to say is that employers and trustees need to be aware that there is a number of [products] in the marketplace offering considerably better value than the cap of 0.75 per cent."

Amendments have been made in relation to auto-enrolment, which are designed to address technical issues and clarify existing powers. 

The DWP consulted on exempting:

• Individuals under tax protected status;
• Those that have handed in their notice;
• People that have given notice of retirement;
• Those that have recently cancelled membership.

Last year we reported that exceptions to auto-enrolment regulations could bring more flexibility to schemes, but may be too late to help those already enrolled.

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