Millions of people planning their retirement will find it easier to manage and get more from their pension pots thanks to the new Pension Schemes Bill introduced today [Thursday 5 June].
The Bill is designed to support working people plan for their retirement by making pensions simpler to understand, easier to manage, and drive better value over the long term – delivering on the Plan for Change to put more money into people’s pockets. One of its biggest benefits is the merging of small pension pots. Many people build up several small pensions as they move between jobs, and these can be hard to keep track of. The new rules will bring these pots together, helping savers see their full pension picture in one place.
The Bill also introduces a new system to show how well pension schemes are performing, this will help savers understand whether their scheme is giving them good value and protect them from getting stuck in underperforming schemes for years on end, to help working people feel more secure about their retirement savings.
For those approaching retirement, the Bill will require schemes to offer clear default options for turning savings into a retirement income. This means people will have clearer, more secure routes to decide how they use their pension money over time.
Work and Pensions Secretary Liz Kendall 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. As part of our Plan for Change we’re helping people find work, stay in work, and ensuring that work pays them back to give them the secure income in retirement they deserve.
Chancellor of the Exchequer Rachel Reeves said: The Bill is a game changer, delivering bigger pension pots for savers and driving £50 billion of investment directly into the UK economy– putting more money into people’s pockets through the Plan for Change.
The Bill will transform the £2 trillion pensions landscape to ensure savers get good returns for each pound they save, and drive investment into the economy, through a suite of measures, including:
• Requiring DC schemes to prove they are value for money, to protect savers from getting stuck in underperforming schemes.
• Simplifying retirement choices, with all pension schemes offering default routes to an income in retirement.
• Bringing together small pension pots worth £1,000 or less into one pension scheme that is certified as delivering good value to savers, making pension saving less hassle and more rewarding.
• New rules creating multi-employer DC scheme “megafunds” of at least £25 billion, so that bigger and better pension schemes can drive down costs and invest in a wider range of assets.
• Consolidating and professionalising the Local Government Pension Scheme (LGPS), with assets held in six pools that can invest in local areas infrastructure, housing and clean energy.
• Increased flexibility for Defined Benefit (DB) pension schemes to safely release surplus worth collectively £160 billion, to support employers’ investment plans and to benefit scheme members.
Minister for Pensions Torsten Bell said:
We are ramping up the pace of pensions reform. Workers deserve to get better bang for each buck saved, and these sweeping reforms will make sure they do. Pension saving is a long game, but getting this right is urgent so that millions can look forward to a higher income in retirement.
The Pension Schemes Bill is part of this Government’s significant pension reform agenda. It follows the major consolidation of the UK pension system set out in the Pension Investment Review. Today’s legislation will create a more efficient, resilient pension landscape, and lay the foundation for the upcoming Pensions Review to examine outcomes for pensioners and set out how to develop a fair and sustainable pensions system, ultimately benefiting both individual savers and the broader UK economy.
|
