In the Queen’s Speech on 15 November 2006, it was announced that the Government will be introducing a Pensions Reform Bill in this session of Parliament.
Although this Bill has not yet been published, it is anticipated that it will contain the following provisions:-
(a) Changes to state pension arrangements and, in particular, uprating the Basic State Pension in line with earnings rather than prices “during the next Parliament” (i.e. between 2012 and 2015) and reforming the contributory system. This reform will include reducing the number of years of contributions that it takes to earn the full Basic State Pension from, currently, 44 years for men and 39 for women to 30 years for both men and women and a more generous recognition of caring contributions,
(b) Increasing the state pension age to reflect increasing longevity with the first increase from 65 to 66 for both men and women taking place between 2024 and 2026. Subsequent increases in the state pension age from 66 to 67 and 67 to 68 will take place between, respectively, 2034 and 2036 and 2044 and 2046,
(c) Simplifying the State Second Pension (S2P),
(d) Abolishing contracted out rebates for defined contribution private pension arrangements
and
(e) Creating a Delivery Authority to establish the new system of personal accounts that it is planned will be introduced from 2012.
It is anticipated that this Bill is likely to be published in the relatively near future and that the Government will also be publishing a White Paper on the detailed aspects of the personal accounts scheme in, probably, early December 2006. This White Paper will provide further information about the Government’s thinking on the model for delivering this new scheme, the exemption criteria for “good” occupational pension schemes and the eligibility criteria for employees to be auto-enrolled into this scheme.