Concerns are growing from MPs and the industry over Government plans to speed up the start date for state pension reforms by one year.
In January the Government published plans to introduce a single-tier, flat-rate state pension worth £144 a week. The original implementation date was April 2017 but last month chancellor George Osborne brought it forward by one year.
In a work and pensions select committee report scrutinising the draft state pension reform bill, published last week, MPs hit out at the Government for the “very late” change and “cavalier” approach while the National Association of Pension Funds says it is “worried” about the timeframe.
The WPSC report states: “The [timetable] change is particularly significant for the pensions industry and employers because of the adjustments which they will need to make to workplace pensions schemes to take account of the ending of contracting-out.”
The report is demanding the Government sets the new date in statute, publish a further impact assessment next month in line with the new timetable and bring forward detailed regulations on contracting-out.
Speaking to Money Marketing WPSC chair Anne Begg says: “Pensions have long-term consequences so we have had enough of this kind of change and are looking for surety over dates so pension holders, employers and the industry knows where it stands.”
NAPF chief executive Joanne Segars says: “We are worried that the new timeframe proposed by the Government is very ambitious. We are pleased that the select committee shares our concerns. We should not jeopardise these important reforms by rushing them through. These are not simple reforms, and pension schemes need flexibility and time to adapt to them.”
Hargreaves Lansdown head of pension research Tom McPhail says: “The Government has been guilty of short-term political manipulation of the timetable.”
A DWP spokesperson said it will study the recommendations before responding.
W&P select committee report on state pension reform
- MPs welcomed the reforms for making the state pension simpler and boosting the appeal of private pensions.
- The transition process will be “long and complex”, particularly for women born between 1952 and 1953.
- The new start date of April 2016 should be set out on the face of the bill to prevent any further changes.
- A new impact assessment should be published next month taking into account the new start date of April 2016.
- DWP should launch a high level communications strategy with an emphasis on online tools so people understand reforms.
- The bill should specify that the minimum number of qualifying years will be “not more than 10 years”
- The bill should include a provision ensuring the state pension is always above the level of pension credits.