In the DWP’s 25-page response paper to the Work and Pensions Select Committee’s scrutiny of the draft Pensions Bill it claims the decision to bring forward implementation by a year to April 2016 was so it could “deliver the new system as soon as possible” and support the roll-out of auto-enrolment.
The WPSC had earlier expressed concerns over the change in tack, claiming it would have implications for individuals, the industry and employers, who would have less time to adopt the changes. It also called for a further impact assessment based on the proposals.
The DWP’s response said an earlier date provided greater certainty, and would allow 400,000 more people to reach state pension age under the single-tier, including women affected by the acceleration of state pension age equalisation.
It added that the government had “engaged extensively” with industry representatives to understand the effect of the end of contracting out the state second pension and the introduction of the single-tier pension.
In response to a call by the committee to carry out an assessment on the cumulative impacts of new pension policies, the DWP said its forthcoming paper, Strategy for Future Pension Saving, would set out key pension challenges faced by the government and an assessment on the impact of current and proposed policies.
The DWP’s paper is expected in autumn of this year.
| Background |
The government’s draft Pensions Bill calls for a ban on consultancy charges for auto-enrolment schemes, in addition to: - Introducing a framework for the regular review of state pension age. - Providing for a system of automatic transfers for small pension pots. - Introducing a statutory objective for The Pensions Regulator. |
Adviser view
Rob Simpson, managing director for Coventry-based Simpson Financial Services, said: “Every year, the rules on the state pension change. When you read between the lines on these proposals, it means that the state will eventually be paying less overall.”