What is the bill?
The Government says it will make pensions easier to understand and manage as long as drive better value over the long term.
The bill will work to ensure savers get good returns and drive economic investment by requiring defined contribution (DC) schemes to prove they are value for money to avoid underperforming schemes.
The key reforms
- Simplifying retirement income options
The bill aims to simplify retirement choices by all pension schemes offering default routes to a retirement income and consolidate and professionalise the Local Government Pension Scheme (LGPS).
- Consolidating small pension pots
It will bring together small pension pots worth £1,000 or less into one scheme certified as delivering good value, create new rules for multi-employer DC scheme ‘megafunds’ of at least £25 billion.
- Unlocking £160bn in DB scheme surpluses
Bigger pension schemes can drive down costs and invest in a wider range of assets and increase flexibility for defined benefit (DB) pension schemes to safely release surplus worth £160 billion.
Justin Madders, Minister for Employment Rights, said: ‘There is no excuse for employers to undercut their workers, and we will continue to name companies who break the law and don’t pay their employees what they are owed.
What the government has said
Liz Kendall, Work and Pensions Secretary, said: ‘Hardworking people across the UK deserve their pensions to work as hard for them as they have worked to save, and our reforms will deliver a huge boost to future generations of pensioners.
‘The bill is about securing better value for savers’ pensions and driving long-term investment in British businesses to boost economic growth in our country.’
How we can help
For employers and payroll teams, these changes will transform workplace pension administration, especially benefitting employees who change jobs frequently.
At Payroll Hub, we’re ready to help clients navigate this pension revolution. Get in touch to see how we can help you.