The UK is introducing a new Pension Bill today – here are the key changes you should know about
The government announced its plans to introduce the new Pension Schemes Bill on Thursday 5 June, which is designed to make it easier for millions of people to manage and get more from their pension pots.
One of its biggest changes proposed in the bill 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.
“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,” said Work and Pensions Secretary Liz Kendall/
“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,” she said.
Some of the key changes being introduced by the bill include:
- Requiring Defined Contribution (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.
