Pension Schemes Act 2015
04 March 2015
The Pension Schemes Act 2015 has become law and gives pension freedoms protection and introduces the new Defined Ambition pension schemes.
The Department for Work & Pensions (DWP) press release states that a revolution in pension scheme design, which could transform the retirement prospects for millions of younger workers, will now become possible with the passing of the Pension Schemes Act 2015.
The act, which received Royal Assent on 4 March 2015, also heralds new rules providing greater clarity for pension savers, as well as protection for those taking advantage of the new pension freedoms after 6 April 2015.
It marks a new era and will pave the way for greater choice for employers in the pensions they offer as well as for savers in how they access their pension savings.
Minister for Pensions Steve Webb said:
“The passing of this act marks the culmination of a 5-year pensions revolution under this coalition government.
While for years successive governments simply watched the slow decline of the final salary scheme, we have responded by giving firms new ways of providing their staff with secure pensions.
There is a real appetite from employers to offer high-quality pensions for their staff and the new Defined Ambition pensions made possible by this act will enable a new generation of better, fairer schemes.
The act also protects the new pension freedoms and flexibilities, so people have control of their pension pots, and know it is a criminal offence for scammers to pretend to offer official Pension Wise guidance.”
The landmark legislation will create the opportunity for workers to save into plans – known as Defined Ambition – which will offer them a promise about some of the benefits they will receive.
Currently, a growing majority of workers who have a pension pay into Defined Contribution schemes which, while offering many advantages, do not give any guarantees of eventual income.
The Pension Schemes Act will also enable new collective pensions to operate in the UK. Schemes offering collective benefits will be able to pool risks between the members and this can provide greater stability and already operate successfully in other European countries.
These reforms come into effect shortly before ground-breaking new pension freedoms which are due to take effect in April.
The Pension Schemes Act also provides further protection measures for pension savers taking advantage of new flexibilities to access their pension pots from this April, including important new legislation on the new guidance service, Pension Wise.
Workplace Savings & Benefits has written an interesting article on What employers need to know about implementing the pension freedoms.