Pensions Act 2014
On 14 May 2014, the Pensions Bill 2013-14 received Royal Assent and became the Pensions Act 2014.
The main provisions are as follows:
State pension reform (the single-tier pension)
The Act contains provisions to roll out the single-tier state pension. The single-tier pension will replace the current basic state pension and additional state pension with a flat-rate pension that is set above the basic level of means-tested support for people who reach state pension age on or after 6 April 2016.
Voluntary national insurance contributions (Class 3A)
The Act provides for a new type of voluntary national insurance contribution, called Class 3A. This will allow pensioners who reach state pension age before 6 April 2016 to top-up their additional state pension.
Bringing forward the increase in the State Pension age to 67
This change will mean that the state pension age will gradually rise from 66 to 67 between 2026 and 2028.
A framework for future changes to state pension age
The framework provides for a regular review of the state pension age, based around the principle that people should spend a given proportion of their lives receiving a state pension.
The Act contains provisions to introduce Bereavement Support Payment to replace the existing bereavement benefits for new customers. The reforms will significantly simplify the system by moving to a more uniform payment structure with:
- support focused on the period immediately following bereavement
- a single contribution condition
The Act introduces a framework to provide for a system of automatic transfers of small pension pots so that a person's pension will follow them to their new pension scheme when they change jobs. This will help people to keep their pension savings in one place.
The Act contains some clarifications relating to automatic enrolment.
Charges and quality standards in workplace pensions
The Act contains powers to allow the government to introduce minimum governance and administration standards and restrict charges in workplace pensions. The government announced that it will use these powers to restrict high and unfair charges and strengthen governance in defined contribution workplace schemes.
Click here to read the government's announcement.
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