Spending review published

At 12:30pm today, the Chancellor of the Exchequer presented to Parliament the Government's spending review.

The key details that were announced that had a direct affect on any pension benefit were:

• Auto-enrolment will start from 2012. Details will be announced when the Government has considered the recommendations of the auto-enrolment review. I expect this to be at the end of October or early November.
• The National Employment Savings Trust will be retained.
• An amount in the region of £1.5 billion will be made available for the Equitable Life Payments Scheme. There will be special measures to cover the costs of annuities for policy holders with 'with profit' annuities. With profit annuitants will recover the full cost of their loss, estimated at £620 million, in the form of regular payments starting next year.
• Winter fuel payments will be retained.
• The temporary increases to cold weather payments provided in the past two winters will become a permanent benefit with effect from November 2010. Eligible households will receive £25 for each seven day cold spell recorded or forecast where they live.
• The maximum savings credit under the pension credit will be frozen for four years from 2011-12, saving £330 million per year by 2014-15.
• The Government has accepted the findings of the interim Hutton Report on public service pensions.  
  • The Government will commit to continue with a form of defined benefit pension and seek progressive changes to the level of employee contributions that will deliver an additional £1.8 billion of savings a year by 2014-15.  
  • There will be measures to protect low earners.  
  • The Armed Forces will be exempt from any increase in employee contributions.  
  • Changes to employee contribution levels will be staggered so the highest earners pay a greater contribution level than those earning less. This will be subject to public consultation. The nature of the benefit and the precise level of progressive contributions will be determined once Lord Hutton's final recommendations have been received (The final report is due in the spring)
• Between April 2010 and November 2018, women's state pension ages are increasing to 65 to bring them in line with the current state pension age for men.  There will be an accelerated increase between April 2016 and November 2018.
• The date at which state pension age will rise to 66 is being brought forward. It will gradually increase to 66 for both men and women between December 2018 and April 2020. There will be further proposals for future increases to State Pension Ages.
• Confirmation of the restoration of the earnings link for the basic state pension from 2011, as part of the triple guarantee of using earnings, prices or 2.5 per cent, whichever is highest, from April 2011.