Pension Schemes Bill
This Bill was passed by the House of Lords on 15th July 2020 and received its Second Reading in the House of Commons on 7th October 2020.
The Bill’s provisions build on the Government’s commitment to tighten the rules to prevent abuse, strengthen the protection for pension savers and ensure that they are provided with the necessary support they need to make informed choices about their financial futures.
The Minister for Pensions and Financial Inclusion, Guy Opperman, has described the Bill as “a milestone in bringing pensions into the digital age”.
As a reminder, the Bill:
Provides the legislative framework to establish and operate Collective Defined Contribution (CDC) schemes
Seeks to strengthen The Pensions Regulator’s existing powers and sanctions regime by introducing the power to issue civil penalties of up to £1m and three new criminal offences
Provides the legislative framework to support online pensions dashboards
Introduces a requirement for prescribed pension schemes to manage and report annually on their exposure to climate-related risks and opportunities
Makes changes to the statutory transfer rules (an area that has seen amendments during the Bill’s progress through Parliament).
The Bill has already encountered several hurdles, having been delayed once due to the 2019 General Election and again due to the need to prioritise emergency health legislation dealing with COVID-19.
We produced a Spotlight following the Bill’s introduction in the last Parliament that summarises the reforms, plus several individual Spotlights that look at some of the proposals in more detail. Please speak to your usual Capita contact for more information.
Social Security (Up-rating of Benefits) Bill
This Government Bill has been passed by the House of Commons and is now in the Lords. It will enable the State Pension to increase in April 2021, even if the UK experiences negative earnings growth this year.
State Pensions are currently increased by the triple lock, which ensures that they rise each April by whichever is highest out of earnings growth, inflation or 2.5%. The Bill aims to iron out a technical detail in the legislation that dictates that, if earnings growth is negative, state pensioners receive no increase irrespective of price inflation.
Work and Pensions Secretary Thérèse Coffey said: “The Government has worked hard to protect all age groups during the pandemic, strengthening the welfare safety net, introducing furlough and income protection schemes, as well as supporting those who have lost their jobs back into work. It is only right, then, that we also ensure pensioners can see their incomes protected as we build back better. In these difficult times, I want to give pensioners peace of mind about their financial health.”
There is concern, however, that maintaining this after the effects of the Coronavirus pandemic could see the State Pension rise significantly, as increases in the following year could be higher due to unprecedented growth caused by the return of furloughed workers.
Finance Act 2020
The Act, which was originally introduced as the Finance Bill 2019 / 20 and later renamed Finance Bill 2020, received Royal Assent on 22nd July 2020.
The Act largely legislates for the announcements made in the March 2020 Budget. In relation to pensions, this includes amendments to the thresholds applicable to the tapered annual allowance, taking effect from 6th April 2021.
A new clause was added to the Act to allow workers to be re-employed to support the Coronavirus response without losing their protected pension ages and suffering adverse tax consequences.
The changes in relation to protected pension ages are effective between 1st March 2020 and 1st November 2020, although the Act includes a power for the end date to be amended to one falling before 6th April 2021. We now understand that the protected pension age easement will not be extended beyond 1st November 2020.
Divorce, Dissolution and Separation Act 2020
The Act, which makes provision in relation to marriage and civil partnership in England and Wales, received Royal Assent on 25th June 2020.
It seeks to remove the element of blame from the initial part of the divorce process by allowing a couple to apply for divorce by making a statement of irretrievable breakdown. It also modernises the language used in the process, for example decree nisi is changed to conditional order and decree absolute to final order. Any documents that refer to these terms will need to be updated.
These welcome changes will come into force late in 2021 to allow for implementation to court, online and paper processes.