The Government has confirmed April 2016 as the start date for a single-tier state pension and confirmed 35 qualifying years will be needed to access the full state pension.
In the state pension reform bill, published last week folowing the Queen’s speech, the Government bowed to the work and pensions select committee’s recommendation to create greater certainty around reforms.
Pensions minister Steve Webb has previously argued against putting the start date in the bill in case an unforseen event, such as EU regulation, forces a delay.
The Government came under criticism in March for bringing forward the start date from April 2017. The NAPF warned against “rushing through” reforms and the WPSC said it showed a “cavalier” approach to reforms.
The bill also cements the number of qualifying years for full state pension at 35 and confirms plans, announced in the Budget , to enable employers with contracted-out schemes to pass on the costs of falling National Insurance rebates through future member accruals or contributions. The power will be available for five years and not for public sector pension schemes.
WPSC chair Dame Anne Begg says confirming the qualifying years and start date will provide “clarity and certainty” for the public, the pensions industry and employers.
Association of Consulting Actuaries chairman Andrew Vaughan says: “We are concerned that moving the date forward for its implementation to 2016 at short notice will cause those remaining open defined benefit schemes to begin work from now onwards to review their schemes for the accompanying end of DB contracting-out.”
Pensions expert Ros Altmann says: “Increasing the number of qualifying years at such short notice is causing a problem since some have already retired with a full 30-year record under the old system and will not be able to accrue the extra five years needed for a full pension in the new system.”