The Pensions Bill 2010-11 received Royal Assent yesterday bringing into force changes, including the increase in State Pensions Age (SPA), changes following the switch from RPI to CPI for increases to pensions and, in a last minute addition, changes to the definition of “money purchase benefits” following the Bridge Trustees decision.
The Act will accelerate the former Labour Government's planned rise in SPA so that it reaches 66 in 2020 (rather than 2026). As a result, men's and women's SPAs also equalise faster, with women's SPA hitting 65 in 2018 instead of 2020. Following pressure for changes to this timetable, to decrease the impact on women in their late 50s, the increase of SPA to age 66 is to be delayed by six months from April to October 2020.
Claire Carey, partner and director of professional development at Sacker & Partners, said: "This is good news for some women who would have been caught by the double increase in SPA - but there will still be half a million women facing an increase in SPA of 18 months and of course, to prevent any suggestion of discrimination, about a quarter of million men have also been handed this olive branch. And the cost to the UK tax payer? The Government estimates that this six month delay may cost £1 billion."
The Act deals with the finer detail of the switch from RPI to CPI as the basis for statutory increases, including changes to introduce CPI as the measure for calculating increases to PPF compensation.
Carey added: "With the RPI/CPI changes announced way back in July 2010, for some schemes (for example, those whose rules specifically specify RPI as the measure for increases) it's been a long wait for details as to how they will be required to implement the changes. And of course the public sector is challenging the right of the secretary of state to impose this change on them in the first place."
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