The government published its Pensions Bill on 29 November 2006. This Bill is the first legislative step in implementing the government’s comprehensive inter-related package of reforms to the UK ’s pensions system.
As anticipated, the main provisions in this Bill are:-
(a) Reforms to state pension arrangements including:-
(i) Uprating the Basic State Pension in line with average earnings rather than prices between 2012 and 2015;
(ii) Modernising the contributory system for determining eligibility for the Basic State Pension to reflect the changing nature of today’s society and labour market;
and
(iii) Simplifying the arrangements for the State Second Pension (S2P).
(b) Gradually increasing the state pension age for both men and women from 65 to 66 between April 2024 and April 2026, to 67 between April 2034 and 2036 and to 68 between 2044 and 2046. This means that these proposed increases will only affect anyone who was born after 5 April 1959, i.e. was below the age of 47 on 5 April 2006;
(c) Abolition of contracted out rebates for defined contribution occupational and personal pension schemes;
(d) Introducing the facility for the trustees of occupational pension schemes to be able to convert members’ rights to a Guaranteed Minimum Pension (GMP) into rights to an occupational scheme pension, calculated under the scheme’s own rules, subject to certain safeguards to protect members’ interests
and
(e) Establishing a body called the Personal Accounts Delivery Authority to undertake the preliminary work that is necessary for the establishment of the personal accounts scheme that the Government is planning to introduce in 2012. The detailed legislation for the personal accounts scheme will be set out in a future Pensions Bill. This is following the publication of a White Paper on the detailed aspects of the personal accounts scheme that we understand is due to be published in mid-December 2006.