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Pensions Bill 2013-14
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Following a consultation in 2011, the Bill was announced in the Queen's speech of 9 May 2012. The Bill was introduced to the House of Commons by the Secretary of State for Work and Pensions, Iain Duncan Smith, on 9 May 2013.
The Bill, as originally planned, aims to establish a new, single tier state pension of around £140 a week and bring forward the increase in the state pension age to 67.
It would allow for:
- the current, complex state pension system to be replaced by a new single tier pension, set above the level of the basic pension credit means test. This is expected to be set at around £140 per week
- the increase in the state pension age to be brought forward, with the age of eligibility increasing to 67 between 2026 and 2028
- the state pension age to rise in the future to account for increases in longevity
However, on 18 September 2012, it was reported that the government's state pension policy was being redrawn following concerns from David Cameron that the £140 pension may alienate the crucial 'grey' vote.
The previous, Labour government's timetable planned for the state pension age to rise to 67 between 2034 and 2036, but this plan will be amended by the Bill. The coalition government has already made changes to the timetable to account for the rising cost of caring for an ageing population - the Pensions Act 2011 allowed for the age to increase to 66 between 2018 and 2020.
The National Association of Pension Funds said the creation of a single tier pension would be "the much-needed foundation on which people can build their own savings, knowing that it pays to save" and would "help ensure that auto-enrolment is a success".
The National Union of Teachers said the state pension age increase was an "unacceptable move", but the Institute of Directors said the current system is "outdated and unsuited to the realities of modern demographics".
In response to the government's plans to raise the state pension age to 68 by 2046, the PCS, Unite and NUT unions launched the 68 is too late campaign.
Should the Bill become an Act, it will only extend to England, Scotland and Wales.
During the Bill's second reading in the House of Commons (17 June 2013), shadow work and pensions secretary, Liam Byrne had welcomed a flat-rate pension but questioned the virtue of reviewing the state pension age every five years.
Work and pensions secretary, Iain Duncan Smith said during the debate that changes to the pension system were "long overdue", and would implement " reforms to modernise bereavement benefits; bring forward the increase in the state pension age to 67; and put in place a mechanism for a regular review of the state pension age".
The Pensions Bill completed its committee stage in the House of Commons on 11 July 2013. Line-by-line examination of the Bill took place over six days and followed two public evidence sessions involving the Pensions Regulator, the Confederation of British Industry and the Association of British Insurers amongst others.
Five government amendments were made and accepted during the committee stage with clauses 27 and 36 receiving minor changes, with a new schedule introduced to provide for a compensation cap to the pension protection fund.
A whole raft of amendments were introduced by the government at report stage of the Pensions Bill on October 29 2013 as the Bill successfully passed from the Commons, to the House of Lords.
All government amendments relating to Part 4 of the Bill and private pensions were successfully passed while a new clause from Labour calling for a review into state pensions in relation to women within 15 years of state pension age was rejected by the government.
On 30 October 2013, the Bill was read for the first time in the Lords and ordered to be printed. The second reading of the Bill was held on 3 December 2013. After a short debate, the Bill was read for the second time and passed to a Grand Committee.
The first day of committee stage took place on 16 December 2013. The focus of the first day of Grand Committee consideration of the Pensions Bill was the cohort of women born between 1951 and 1953. Amendments relating to this issue were withdrawn after debate. It was stated that the government were taking a "swings and roundabouts" approach to pension reform, as there were advantages and disadvantages to the single-tier pension scheme in relation to the age at which it could be claimed.
The government rejected an amendment calling for a review of the phased transition to the 35-year qualification period to get the full-rate single-tier pension and provided more details on the communication strategy envisaged for the introduction of the single-tier state pension.
The second day of committee was held on 18 December 2013. Calls to review the transitional arrangements for married women's dependency pensions were rejected by the government who argued it would lead to uncertainty.
Responding to another Labour amendment, the government also said they would return at a later stage having considered proposals around service wives to be credited with national insurance contributions going back to 2000.
Peers moved on to consider opposition amendments relating to inherited state pensions, derived entitlements for divorcees, and entitlements to state pension at transitional rates, all of which were discussed but withdrawn.
The House of Lords debated the third day of committee stage of the Pensions Bill on 9 January 2014. Whilst none of the amendments were agreed, discussions were had around lump sums, the impact of the state pension in divorce cases, uprating for pensioners living abroad and other technical measures.
The grand committee on the Pensions Bill met in the Lords for the fourth time on 13 January 2014. The government clarified issues raised in the previous committee stage debate on the need to ensure that statutory mechanisms to amend pension schemes were used with care. The government inserted a new clause in to the Bill concerning options to boost retirement pensions by allowing people to pay a new voluntary national insurance contribution. A consequential amendment concerning the abolition of contracting out was also accepted. Following a debate peers decided to leave clause 25 - to raise the state pension age - in the Bill. Labour sought to insert provisions concerning factors the secretary of state should have to consider when reviewing the pension age, but these were withdrawn.
In the fifth day of committee on the Pensions Bill (15 January 2014) there was debate on the impact of phasing out of assessed income periods and amendments were tabled probing further detail about changes to bereavement benefits payments.
A number of technical amendments were agreed including amendment 62 to insert a new schedule on 'options to boost old retirement pensions'
There was a lengthy debate on opposition amendment 62ZC regarding the automatic transfer of pension benefits. The opposition maintained there should be a default aggregator model but withdrew this amendment after the government insisted that the proposed pot follows member system was the correct approach.
In the sith day of committee, the government was criticised over their handling of issues around pension charging, but Lord Bates revealed that the pensions minister Steve Webb would be updating the House of Commons on his response to the issue of a cap on pension charges on 23 January 2014.
Government amendments were accepted regarding the Pension Protection Fund (PPF) and compensation cap and Lord Bates told the House which regulations within the Bill would be subject to affirmative resolution procedure, following recommendation from the Delegated Powers and Regulatory Reform Committee.
Probing amendments were tabled on the implications of the application of one of Pensions Regulator's objectives on charities and on the provision of independent advice on annuities for those approaching retirement.
The opposition amendments on the current restrictions on NEST were withdrawn.
The House of Lords report stage for the Bill took place on 24 February 2014. Despite the government arguing there was no evidence to suggest that being on a zero hours contract presented barriers to entering the national insurance (NI) system because of low pay, peers agreed a Labour permissive amendment that sought to protect those people working on short term contracts.
The government also rejected an amendment to extend to 12 months the period by which work conditionality could be applied to widows. Lord Freud, welfare reform minister, suggested the best means of support discussed was "through a shorter-term payment of bereavement support payment and a longer-term income replacement benefit in the shape of universal credit" instead of what had been proposed.
Amendments were also withdrawn that would have required the government to introduce arrangements for periodic notification to individuals of their entitlement to request a pension statement.
Moves to remove the part in the Bill that limited consolidation of small pots to the "pot follows member" (PFM) form of consolidation and open up the option of an aggregator scheme was voted down in the Lords on 26 February 2014.
Amendments specifying that regulations cannot exclude an employer from their automatic enrolment duties on the basis of size was agreed whilst a government amendment to make regulations requiring greater transparency around the transaction costs incurred by work-based defined contribution schemes was agreed.