UK seeks to boost effective retirement saving
UK – The UK government says it will introduce legislation to encourage people to save more effectively for their retirement - and companies are also to be encouraged to provide “good quality” pensions.
“Legislation will also be introduced to encourage both employers to provide good quality pensions and individuals to save more effectively for their retirement,” Queen Elizabeth said in her annual address before the opening of the new parliamentary session. The speech traditionally outlines the government’s legislative programme for the next year.
“A Pension Protection Fund will be set up to protect employees and pensioners if companies become insolvent,” the Queen added.
The measures were expected. The Department for Work and Pensions said the bill would “provide a balanced package of measures to ease the financial burdens and cut red tape for employers whilst offering a sustainable system of protection to individuals”.
The legislation would see the setting up of a new pensions regulator with a more “proactive” approach.
The bill extends the so-called Transfer of Undertakings (Protection of Employment), or TUPE, regulations to private sector transfers – to make sure pension rights of an employee are not withdrawn when a business transfers.
And there is a new approach to vesting – with employees being given the option of a cash equivalent transfer value after just three months in a scheme. Currently staff who leave during the vesting period can lose their entire employer pension contributions and tax relief.
Other features of the bill are a relaxation of the limited price indexation requirement and the removal of requirements for guaranteed minimum pension – a move aimed at simplifying contracting out.