Pensions Act 2014 - How it could affect your employees
27 April 2015
From 6 April 2016, there will be major changes to State Pensions and new requirements for occupational pensions.
Employees will have to complete 35 or more qualifying years, before they reach State Pension Age, to be entitled to the maximum level of State Pension. Anyone who hasn't gained the full 35 years, but has at least 10 years will still be entitled to a pension albeit at a reduced rate.
The introduction of the Act, now means pensionable age will increase to 67. This will affect all your employees born on, or after, 6 March 1961.
The Pension Act 2014 changes also impact partial entitlement, transitional pension and a survivor's pension. More information is available from our leaflet 'The Pensions Act 2014'.
Automatic transfer of pension benefits
The Act allows the introduction of a cash equivalent value of accrued pension benefits to be automatically transferred to a new employer. This will occur only in certain circumstances. More details are to follow on this.
The Act also stops employees in salary related pension schemes being offered incentives to request, or agree, to transfer their pension entitlement.
A change to short service refunds.
Cash refunds for accrued pension savings to leavers will only be allowed where employment has lasted no more than 30 days rather than the current first two years.
Mandated disclosure of transaction costs.
Pension schemes will have to be more transparent with transaction costs and other relevant information too. Some, if not all of these costs and charges will have to be published and provided to scheme members, their spouses or civil partners and other individuals who plan to use a scheme for qualifying purposes under auto-enrolment regulations.
Some of the detail regarding these changes has still to be confirmed by the government. For more details, analysis of the changes please read our leaflet 'The Pensions Act 2014'. This will provide you with more detailed information on the Act and how it could affect you and your employees.
The Pension Act 2014 (pdf)