Queen’s SpeechPrint publication
Included in the Queen’s Speech on 4 June were announcements of two new pension bills: the Private Pensions Bill and the Pensions Tax Bill.
A brief summary of each bill is set out below:
The Private Pensions Bill
The Private Pensions Bill will establish three definitions for scheme types. They will be: defined ambition, defined benefit (DB) and defined contribution (DC).
As yet, it is not clear how this will dove-tail with the statutory definition of a “money purchase scheme” which is about to be amended to take account of the revised definition of “money purchase benefits” as set out in the Pensions Act 2011. We will keep you updated on this.
The Private Pensions Bill will also facilitate the creation of collective defined contribution (CDC) schemes. CDC schemes are designed to pool members’ funds and mitigate the investment risk between other members. The announcement of the creation of CDC schemes has, on the whole been received positively from the pensions industry.
The Private Pensions Bill, subject to the HM Treasury consultation, may also bring forward legislation to prohibit transfers from all private sector DB schemes.
The Pensions Tax Bill
The Pensions Tax Bill will introduce a tax framework to allow individuals aged 55 or over to be able to access their defined contribution pot; subject to paying the additional marginal tax rate.