Pensions Act 2011
| Story: | Pensions Act 2011 |
| Date | 07/12/2011 |
Summary: |
It has largely gone unreported that the controversial Pensions Bill received its required Royal Assent on 3 November. This means that the Pensions Act 2011 now fully brings into force the several significant changes that were originally envisaged, including: |
·The increase in State Pension Age
·The switch from Retail Price Index (RPI) to Consumer Price Index (CPI) for increases to pensions
·The new definition of “money purchase benefits”
The Act will bring forward the previous Labour government’s planned increase in the state pension age to 66 to take place in 2020 rather than, as was originally planned, in 2026. This will mean that the State Pension Age for men and women will be equalise earlier, with women’s State Pension Age becoming 65 in 2018 instead of 2020. Following pressure for changes to the timescale for implementation, a minor delay to the subsequent increase to 66 for both sexes means that this is now to be put back by six months from April to October 2020.
The Act also deals with the change from RPI to the CPI as the basis for future statutory increases and adds detail to the basis for these calculations. It remains to be seen whether the current resistance and protests from the Public Sector unions, in particular, on this issue causes any further adjustments to these plans. The proposed changes were announced in the summer of 2010, so future details of how the implementation of the changes are to be administered will be welcomed.
The new Act also introduced last minute amendments to the main definition of “money purchase benefits”, such schemes being amended with effect from 1 January 1997. The definition of what is and is not a money purchase benefit will certainly mean that it will take some time to clarify the full range of schemes which fall under the definition which will inevitably therefore lead to a further period of uncertainty in this area.
