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TPAS Newsletter - January 2011

An Interesting Year to Come!

Welcome to the first newsletter of 2011.

This promises to be an interesting year in the world of pensions as major reforms are implemented (e.g. abolishing the age-75 rule for compulsory annuity purchase and bringing forward the state pension age increase to 66) and other reforms are discussed (e.g. bringing in the citizen's pension and allowing the early release of pension funds on the grounds of hardship).  As usual, you can read about these reforms, and other interesting developments, in this newsletter.

Basic State Pension Increasing To £102.15

The maximum Basic State Pension (BSP) is rising in April 2011 to £102.15 per week.  This is a rise of 4.6%.  This is the first time the new increase rules have been applied - the BSP will increase annually by the greater of earnings, prices or 2.5%.

Other rates from April 2011 include:

Cold Weather Payment Increases Permanently To £25

Pensioners and people receiving certain state benefits receive a Cold Weather Payment (CWP) for each seven day period of very cold local weather between 1 November and 31 March.

From 1 November 2010, the CWP permanently increased from £8.50 to £25.

Click here to read more about the Cold Weather Payment

CWP should not be confused with the Winter Fuel Payment (WFP).  The WFP is between £125 and £400 (depending on circumstances) and paid to most people born on or before 5 July 1950.

Click here to read more about the Winter Fuel Payment  

Draft Regulations On Scrapping Annuitsation At 75 Published

The Government announced a few months ago that it would abolish the requirement to purchase an annuity by age 75.  Draft legislation has now been published and the proposals are, from 6 April 2011:

Default Retirement Age To Be Abolished

Further to our report last August, the Government has this month passed legislation phasing out the Default Retirement Age (DRA) from 6 April 2011.

From 6 April 2011, employers will not be able to issue any new DRA notices.  Notices issued before 6 April 2011 will still be valid, even if the forced retirement date is after.

Despite the DRA being abolished, employers will still be able to compulsorily retire employees if they can 'objectively justify' it. An objective justification allows an employer to set requirements that are discriminatory.  To be objectively justified, an action or rule must be a 'proportionate means' of achieving a 'legitimate aim'.  Factors an employer should take into account when deciding whether a practice or rule can be objectively justified may include:

New Government Consultations On Pension Changes

Over the last couple of months, the Government has started consultations on a number of high profile pension rule changes.  They include:

CPI Increases For Private Pensions

The consultation is seeking views on the Government's proposal to switch increases on private pension from the Retail Price Index (RPI) to the Consumer Price Index (CPI).  This is a switch that is already being applied to state and public sector pensions.

Historically, CPI has been lower than RPI.  The switch could therefore see reduced payouts to members of private pension schemes.

The Government's proposals are:

Click here to visit the DWP's website and view the consultation document 

Early Access To Pension Funds

This consultation is seeking views on the possible early release of pension funds for people in financial hardship. The Government is considering:

Click here to visit the Treasury's website and view the consultation document

Scottish Equitable Pays Price For Administration Errors

Scottish Equitable has been fined £2.8m by the Financial Services Authority (FSA) for "causing significant consumer detriment through poor administrative procedures".

According to the FSA, "the total consumer detriment... is estimated to be £60m. Scottish Equitable Plc is undertaking a redress programme to compensate customers who missed out on payments or benefits that they were entitled to or who were disadvantaged by its actions. Scottish Equitable Plc has already started to compensate consumers and will have paid £30m in redress by the end of 2010."

Click here to visit the FSA's website and view their press release

Reminder! State Pension Age Increase To 66

The Government is planning to make State Pension Age (SPA) changes from April 2016.  Their plan is to speed up the increase to 65 for women and then bring forward the increase for men and women to 66.

Click here to visit the SPA page of our website for full details

Live Q&A

We hold a live online Q&A session on the second Wednesday of every month.  During the session, our experts will answer any pension related questions you may have.

The next live online question & answer session is on Wednesday 9 February 2011 between 2pm and 3pm.

Click here for further information about the Live Q&A and view previous sessions

Website Feedback

We're always keen to know how our website can be improved.  Please therefore take a couple of minutes to fill out our feedback form.

Click here for further information

Become a TPAS Adviser

TPAS is manned primarily by volunteers.  We are always on the lookout for new volunteers so, if you work in the pension industry and want to give some of your spare time to helping people with pension problems, please let us know.

Click here for more information about volunteering

Contact Us

If you have any pension questions, please feel free to contact us by calling our helpline on 0845 601 2923, emailing or writing to us at 11 Belgrave Road, London, SW1V 1RB.


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