Budget 2021: Sunak announces pension lifetime allowance freeze
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Pension schemes will be altered over the coming months and years as the long-awaited Pension Schemes Bill received Royal Assent last month, allowing it to officially become law. The act is focused around ensuring private pensions are managed sensibly and provide the best outcomes for members.
Guy Opperman, the Parliamentary Under Secretary of State for Pensions and Financial Inclusion, recently issued a statement on the act, noting it will introduce:
- Three new criminal offences, including a sentence of up to seven years in jail for bosses who plunder or run pension schemes into the ground.
- The legislative framework needed to usher in pensions dashboards that will give savers greater control over, and awareness of their pensions.
- The legislative framework to allow Collective Money Purchase pension schemes to operate.
- Powers to require pension schemes to take the Paris Agreement temperature goal into account, and other climate change goals set by the Government.
- Strengthened rules around pension transfers to prevent members being misled in relation to transferring their pensions pots.
- Measures to support trustees and employers to improve the way they plan and manage scheme funding over the longer term and enable the Pensions Regulator to take action more effectively to protect members’ pensions.
Mr Opperman went on to explain what the Government’s next steps will be: “We are now progressing the secondary legislation to ensure the UK’s pension system is safer, better and greener.
“The sequencing of the subsequent legislation will allow for proper consultation, engagement with key stakeholders and further Parliamentary debate, through affirmative procedure where required.
“Following our consultation in January 2021 on Climate Change, we will lay these world leading regulations this Summer to come into force ahead of COP26.
“This will make the UK the first major economy in the world to legislate for, and bring into practice, the recommendations of the Taskforce on Climate-related Financial Disclosures, ensuring climate change is at the heart of the pensions system.
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“On the Pensions Regulator’s Powers, we will consult on the majority of draft regulations this Spring, and will commence these powers and the criminal offences measures in the Autumn.
“For the duty to give notices and statements to the Regulator in respect of certain events, we will consult on the draft regulations later this year, for commencement as soon as practical thereafter.
“In early Summer we plan to consult on draft regulations for scams and Collective Defined Contribution Schemes, with commencement on the scams measures from early Autumn 2021.”
The Minister went on to explain that the Government aims to consult on proposed regulations for the pensions dashboard later this year and lay draft regulations before Parliament in 2022.
Mr Opperman confirmed the delivery date “remains on track” for 2023.
The pensions dashboard is a service being worked on by the Pensions Dashboards Programme (PDP) team to “enable individuals to access their pensions information online, securely and all in one place, thereby supporting better planning for retirement and growing financial wellbeing.”
The PDP was established by the Money and Pensions Service to design and implement the infrastructure that will allow the dashboard to work.
On top of these public efforts, other organisations will also provide dashboards and the PDP is working with the pensions industry, Government and regulators to ensure all remain aligned.
The introduction of this dashboard may not come soon enough for some people, with recent analysis of ONS data showing that approximately 45 percent of people are not confident about their future standard of living in retirement.
Additionally, on the climate issue, research conducted in mid-February by Cushon found that as many as 99.5 percent of the population may be oblivious to their pension’s carbon emissions.
Ben Pollard, the Founder & CEO of Cushon, commented on this and what needs to be addressed within the industry: “Our research shows that people are concerned about how their pensions are adding to the damage done to the planet, but there is very little information available to pension members.
“They are calling for more information and they want more control. The pensions industry needs to provide greater transparency around the impact of investments on climate change. This is an issue that’s been brushed under the carpet for far too long.”
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