Report on the Pensions Bill (NIA BILL 42/11-16)
Date: 19 February 2015
Reference: NIA 229/11-16
Mandate Number: 2011/16
Report on the Pensions Bill.pdf (6.66 mb)
This report details the Committee’s consideration of the Pensions Bill, which was referred to it on 19 November 2014. The Pension Bill is part of a wider range of pension reforms but the key aspect of this bill is the introduction of a new single tier pension.
The Committee heard from three stakeholders who responded to its call for evidence.
Significant issues were discussed with stakeholders and the Department in relation to the acceleration of the Pension Age to 67; the increase in qualifying years required for people to claim state pension; and Bereavement Support Payment. A number of other issues were raised in respect of various aspects of the Bill and these were largely addressed to the Committee’s satisfaction.
The Committee agreed with stakeholders that a simpler state pension system that provided clarity about future state pension income was welcome.
The Committee welcomed the fact that the self-employed who are currently only entitled to the basic state pension, will be entitled to the full state pension as long as they accumulate 35 qualifying years.
The Committee also welcomed the fact that officially recognised carers could also be recipients of the new full state pension as it is aimed at those who have made a significant contribution to society.
The Committee was concerned that there may be a significant number of people acting as carers who are not officially recognised as such and who may therefore not be awarded an appropriate level of state pension.
While the Committee originally had concerns about the introduction of the Bereavement Support Payment these were largely addressed by the Department. However, the Committee remained concerned about the exclusion of unmarried cohabiting partners from this scheme simply on the basis of the difficulty in verifying the bona fides of such relationships. The Committee recommends that the Department considers how official confirmation of these relationships could be established in order to facilitate payment to the surviving partner of such a relationship.
The Committee was concerned that those with multiple part-time jobs or in zero hours contracts might not be in a position to make National Insurance contributions and therefore not reach the minimum qualifying period of 10 years. The Department noted that National Insurance was an excepted matter and therefore falls outside the remit of the Assembly. However, this has been acknowledged as an issue and the Committee was informed that DWP and HMRC are looking at this for the longer term.
The Department advised the Committee that it had estimated that this provision would only affect between 225 and 300 people. In fact for the last year for which figures are available (2012-2013) there were only 110 people who put in a claim who were actually getting less than the 10-year amount.
The Committee did not propose any amendment to the Bill.
That the Department monitor the impact on widowed parents with dependent children by replacing widowed parent’s allowance and other bereavement benefits with the Bereavement Support Payment.
The Committee noted that the Bereavement Support Payment will not extend to surviving unmarried cohabiting partners, which is currently also the case in relation to the payment of widowed parent’s allowance. The Committee noted that the main reason for this is the difficulty in officially verifying the bona fides of the relationship. However, the Committee shared the concerns of Cruse and the Childhood Bereavement Network that this might ultimately impact on the children of such a relationship. The Committee therefore recommends that the Department investigates how verification of such relationships could be established with a view to including unmarried cohabiting partners through the Bereavement Support Payment.
The Committee calls on the Department for Social Development to work with stakeholders and other Departments, particularly DHSSPS, in order to maximise the number of informal carers who are officially recognised as carers.
That the Department provides an update whenever HMRC and DWP make progress towards effectively capturing information of those working multiple jobs and struggling to reach LEL, to ensure recognition of their ‘service to society’ and that qualifying years can be accumulated accordingly.
The Westminster Pensions Act 2014 received Royal Assent on 14 May 2014. The corresponding Bill in Northern Ireland, the Northern Ireland Pensions Bill 2014, was introduced to the Assembly on 10 November 2014 and had its second reading on 18 November 2014.
At an initial briefing the Department described the Bill as a ‘mixed bag’ and noted that while the proposal to introduce a single-tier pension had broadly been well received other aspects of the Bill were likely to prove less popular.
Speaking in the chamber at the Bill’s second reading, the Committee Chairperson acknowledged this, noting that it would be perceived that there would be both winners and losers as a result of the proposed changes.
The Committee considered it important to scrutinise the Bill to get a fuller picture of the practical implications of the Bill.
The Committee received a pre-introductory briefing on the Bill from the Department at its meeting on Thursday 6 March 2014. At the introduction of the Bill to the Assembly on 10 November 2014 the Minister for Social Development made the following statement under section 9 of the Northern Ireland Act 1998:
“In my view the Pensions Bill would be within the legislative competence of the Northern Ireland Assembly”
The Bill, as introduced by the Minister, contains 54 clauses and 20 schedules.
Second stage of the Bill was agreed by the Assembly on 18 November 2014, after which it was referred to the Committee for Social Development for consideration.
On 1 December 2014 the Committee brought a motion to the Assembly to extend the committee stage of the Bill to 26 March 2015 in order to facilitate engagement with stakeholders as required.
As part of the Committee’s consideration of the Bill, a public call for evidence was issued in December 2014. The Committee sought submissions from stakeholders through advertisements placed in the Belfast Telegraph, Newsletter and Irish News.
The Committee also proactively contacted stakeholders who had contributed to the Department’s consultation on the Bill, to determine whether they also wished to make a submission to the Committee.
The Committee subsequently considered the Bill and related issues at its meetings on 25 November 2014, 2 December 2014, 9 December 2014, 13 January 2015, 22 January 2015 and 29 January 2015.
The sessions in December and January included briefings with officials from the Department for Social Development, with stakeholders and discussions amongst the Committee members. The relevant extracts from the minutes of proceedings are included at appendix 1.
As part of its consideration, the Committee took oral evidence from those stakeholders that provided substantive written submissions. Minutes of evidence for these meetings, together with minutes of the Committee’s meetings with departmental officials, are included at appendix 2.
The Committee received three substantive written submissions to the call for evidence, as well as three email responses. These are included at appendix 3.
The Committee worked closely with the Department throughout the committee stage to ensure that this was completed as expeditiously as possible. As well as attending meetings with the Committee, the Department addressed concerns of both the Committee and stakeholders by correspondence. These written responses are included at appendix 4 together with written briefings provided by the Department.
The Committee conducted the formal clause-by-clause consideration on 5 February 2015 and agreed its report on 19 February 2015.
Consideration of the Bill
Background – The Pensions Bill as part of wider pension reforms
In 2014 – 2015, as well as scrutinising the Northern Ireland Pensions Bill, the Committee considered a Legislative Consent Motion relating to the Westminster Pension Schemes Bill and anticipates scrutinising a forthcoming NI Pensions Schemes Bill, which will reflect the provisions of the Westminster Bill.
Given the various pension reforms, the Committee sought some information from DSD on the current landscape of changes to pensions, to put this Pensions Bill in context.
The Northern Ireland Pensions Bill 2014 introduces changes in respect of the state pension, as well as some provisions relating to private pensions;
The Pensions Schemes Bill is concerned with private pension schemes;
The UK-wide Taxation of Pensions Act deals with taxation and financial services, which are excepted and reserved matters respectively and, as such, outwith the Assembly’s control.
The Northern Ireland Pensions Bill 2014
The Committee considered the Pensions Bill between November 2014 and February 2015. The Bill contains reforms to both the state pension system and bereavement benefits. The Bill seeks to simplify the current state pension, as part of the broader pension reforms, which consists of state pension and additional state pension, replacing this with a new single-tier pension.
The Bill primarily contains reforms to the state pension system, although Part 6 contains a number of measures relating to private pensions, designed to build on the introduction of automatic enrolment and give people greater confidence in pension saving.
The Bill also contains provision to bring forward the date at which the state pension age will increase to 67. It provides for this change to be implemented between 2026 and 2028, rather than the original schedule of between 2034 and 2036.
The Bill will increase the minimum qualifying period for state pension to 10 years and the minimum number of qualifying years to receive full state pension from 30 to 35 years. The former of these provisions actually allows for the increase in minimum qualifying years to be 10 at most, but speaking at the second reading of the Bill, the Minister for Social Development noted that this would be increased to 10.
The Bill was introduced by the Minister for Social Development on 10 November 2014 and had its second reading on 18 November 2014, coming to the Committee for Social Development for committee stage on 19 November 2014.
The statutory timescale for the committee stage of a Bill is 30 days, which placed the original deadline for completion of this stage at 20 January 2015.
The Committee was nevertheless of the view that the Bill warranted comprehensive consideration, given its far-reaching impact on society and felt it important to ensure that the implications of the Bill were fully understood and that any necessary steps are taken to minimise potential detrimental impacts of the Bill.
With all this in mind, the Committee tabled a motion to extend the committee stage of the Pensions Bill. This motion was brought to the Assembly on 1 December 2014.
The Assembly agreed to the extension of committee stage to 26 March 2015 to ensure the Committee could conduct adequate consideration of the Bill, including consultation with stakeholders, although the Committee made a commitment that it would endeavour to complete consideration as close to the original deadline as possible.
The Committee issued its call for evidence on 21 November 2014.
Call for evidence
In response to its call for evidence the Committee received three substantive written submissions. Additionally the Committee received shorter written responses from four stakeholders, commenting on particular aspects of the Bill.
All the written submissions received by the Committee are included at appendix 3.
The Committee received oral briefings from stakeholders at meetings on 2 December 2014, 13 January 2015 and 22 January 2015. Representatives from the following organisations gave evidence:
Northern Ireland Public Service Alliance (NIPSA)
Northern Ireland Committee – Irish Congress of Trade Unions (NIC ICTU)
Commissioner for Older People for Northern Ireland (COPNI)
Cruse Bereavement Care / Childhood Bereavement Network
Additionally, the Committee took a briefing from the SSA on the communications strategy for the reformed state pension on 9 December 2014.
Additional written responses were noted by the Committee and the Department provided clarification on matters raised in these responses that were not covered elsewhere in the Committee’s consideration.
Following consideration of stakeholders’ evidence, written and oral, the Committee met on 29 January 2015 to discuss its position on issues that had been raised during its engagement with stakeholders. The Department attended this meeting to provide further clarification.
The Department also attended the formal clause-by-clause consideration of the Bill to provide clarification on issues raised in a follow-up written submission from Cruse Bereavement Care.
Over the course of discussion and evidence sessions, a number of issues were raised in relation to the Bill, both by stakeholders and by members of the Committee. Some of these related to specific clauses in the Bill while others related indirectly to Bill.
Some of the main issues raised throughout consideration were:
Impact of the acceleration of state pension age
Perceived inequitable impact on women and men
Increase in minimum qualifying years to 10 years
Increase from 30 to 35 qualifying years for full state pension
Implementation of the Bereavement Support Payment
These are considered in more detail in the following sections.
Part 1: Single-Tier Pension (Clauses 1 – 24)
Part 1 of the Bill makes provisions to introduce a single-tier state pension from 6 April 2016, increase the minimum number of qualifying years to no more than 10 and increase qualifying years for full pension to 35.
Potential of changes to impact disproportionately on women as compared to men
The Committee considered concerns expressed by the Commissioner for Older People (COPNI) that as a result of the staggered implementation of the increase in state pension age there will be men and women born on the same day who will receive different rates of pension.
The Committee was reassured following discussion with the Department, in which officials outlined in some detail that in fact, while there would inevitably be people adversely affected by the introduction of the new pension, that there is no evidence to show that one sex would be at a particular or disadvantage over the other.
For example, a woman born on a given day would be able to claim a pension under the old state pension system, comprised of state pension and second state pension, and a man born that day would fall under the new single-tier system. While this might suggest that a woman would be disadvantaged compared to a man it would be the case that a woman would be able to claim her pension earlier and to access pension credit, savings credit and other measures under the old system. Access to these benefits under the old system would afford women the potential to bring their pension to a level in line with the state pension claimed under the new system.
The Committee considered the Department’s response on this matter and was satisfied that, although men and women in the situation outlined would face different circumstances in the wake of the reforms, that each would be able ultimately to attain pension at a similar level.
The Commissioner for Older People also advocated that the single tier pension should be set at 5% above the pension credit guarantee level.
Implications of the increase in qualifying years
Throughout the consideration process, a number of issues emerged in relation to the increase in qualifying years. Stakeholders expressed the general view that the increase in qualifying years from 30 to 35 appears disproportionate given that the state pension age has increased by only one year.
Under the current system 30 qualifying years are needed to claim the full state pension, while 52 years are needed to claim state second pension. The Committee heard evidence from the Department as to the rationale for the five year increase in qualifying years.
The increase to the basic number of qualifying years needed to claim the new single-tier state pension to 35 is intended to strike a balance in this simplified system.
The Department provided a breakdown of exactly how, under the proposed scheme, 30 qualifying years, although not entitling a claimant to the full state pension, it would in fact result in a pension entitlement of £127.20, in contrast with the current full state pension entitlement £113.10.
The full entitlement after 35 years will be £148.40, more in line with the current state second pension.
The Committee was satisfied at the reasoning outlined. It also noted the Department’s comments that the increase in qualifying years was intended to reflect the fact that working lives are lengthening.
The Committee acknowledged this but some members felt that while people may be living longer they are not necessarily living healthier lives.
Therefore, although people are able to work longer and claim their pension, there is no guarantee of a good quality of life in retirement years when people will be able to use their pension.
Multiple part-time jobs and zero-hour contracts
One issue that came to the fore as a result of evidence presented by COPNI and that the Committee explored in subsequent discussion, was that those working multiple part-time jobs or on zero-hour contracts may struggle to reach the Lower Earning Limit (LEL) required to trigger National Insurance contributions. The Committee noted the prevalence of this given the current environment in which there is a proliferation of zero-hour contracts.
The Committee heard that the 10 years minimum qualifying years was intended to capture ‘service to society’ but the Committee was concerned if employees do not meet the LEL, it may result in difficulties in accumulating qualifying years.
The Committee discussed with the Department whether there were other ways to effectively capture the cumulative hours worked by people in this situation.
The Department confirmed that HMRC and DWP are currently engaged in looking at potential ways to capture this information and that any solution to this issue lies outside the powers of the Assembly.
The Committee will seek to monitor any progress by HMRC and DWP to effectively capture this information and ensure people accumulate qualifying years that reflect the work they have done.
Members of the Committee on a couple of occasions discussed with departmental officials whether prisoners who had their convictions overturned would have their pension payments backdated and, subsequently, whether this would apply in instances where the Royal Prerogative of Mercy had been applied.
The Committee noted the Department’s response that payments could only be backdated in instances where a conviction had been quashed by the courts and that this would not apply in instances where the Royal Prerogative of Mercy had been applied because only the courts have the power to quash convictions.
End of contracting-out
The Committee noted concerns raised by NIPSA about the effect of the end of contracting-out of occupational pensions on defined-benefit schemes. It was suggested that this would mean that in 2016 public sector employees will have to find an additional 1.4% and that employers will have to find an additional 3.4% of National Insurance contributions and that those who are currently contracted out will not get the benefit of the full, single flat-rate pension.
The Department responded that contracting-out will end along with the Additional State Pension – i.e. with the introduction of the single tier pension. This clause abolishes contracting out and introduces the power to amend schemes to reflect the end of contracting out.
The clause and schedules are intended to ensure that all rights accrued by employees through salary-related contracted-out schemes are protected and that somebody who stays in a scheme up until the abolition will not be treated as having left simply because contracting out has ended.
They also allow private sector employers to adjust members’ future pension accruals or contributions to take into account the loss of the employer’s rebated National Insurance contributions (this will apply for a period of 5 years from 6 April 2016). This option will not be available to public sector employers who will be liable for additional employer contributions.
Employers who run defined-benefit schemes do so on a purely voluntary basis but they must comply by legislative requirements. In these schemes the employer bears the risk. Due to increasing longevity and financial volatilities, defined-benefit can present a significant financial strain and are more frequently closed to new members.
Part 2: Option to Boost Additional State Pension (Clause 25)
No particular concerns were raised in relation to Part 2 of the Bill during the committee stage of the Bill process.
Part 3: Pensionable Age (Clause 26)
The Bill brings forward the date at which state pension age is due to increase to 67 and in considering the Bill, the Committee, in consultation with stakeholders, noted with particular concern that those who are currently closest to retirement age will likely face difficulties in financial planning for their retirement given the changes to the current system.
As with the increase in qualifying years, the Department noted that the rationale for the increase in retirement age was increasing life expectancy. On this matter, although the Committee acknowledged that this was the case, members returned to the point that although people are living longer, this does not mean that they are healthy in their later years.
The Committee was satisfied that the Department is developing a communications strategy that would adequately convey changes, appropriately targeted at different demographics, to ensure that people are aware of the changes and their implications. Indeed, the Committee received a separate briefing from the SSA on the proposed communications strategy.
Committee members were concerned that the Bill would allow for subsequent incremental increase of the pension age beyond 67 but were reassured by the Department’s assertion that any further increase in the pension age would require the introduction of additional primary legislation.
Part 4: State Pension Credit (Clauses 27 & 28)
Phasing out Assessed Income Periods
The Committee noted concerns raised by COPNI that the ending of AIPs could cause stress and anxiety amongst some older people.
As with the general changes to the state pension, the Committee indicated that this would rely heavily on the Department effectively communicating such changes to all demographics, to minimise any risk of confusion and anxiety.
As with the general impacts of the increase in pensionable age, the Committee was reassured that the Department was committed to an extensive and effective communication programme and will seek to monitor the effectiveness of this programme.
Part 5: Bereavement Support Payment (Clauses 29 – 31)
Most of the Committee’s consideration of the introduction of Bereavement Support Payment (BSP) was generated as a result of the Committee’s engagement with Cruse Bereavement Care who provided evidence to the Committee in conjunction with Childhood Bereavement Network.
The Committee noted with concern that BSP cannot be claimed once individuals reach state pension age and that more people will be affected as pension age increases. Cruse recommended an NI-specific study into this matter.
Cruse expressed particular concern over the replacement of a number of benefits, including Widowed Parent’s Allowance, with a single Bereavement Support Payment and the likely impact of this on widowed parents with dependent children.
The Committee considered recommending that the Minister initiate such a study in NI.
Cruse also proposed the option to receive bereavement payments in smaller sums over a longer period of time.
The Department explained that the bereavement payment is not subject to tax on the basis that it is made for no longer than 1 year. Officials noted that the Treasury had indicated that should the payment be made over more than one year then it would be taxed. This obviously would have the effect of reducing the total value of the payment received by the surviving partner.
Officials also stated that under current EU law the payment is classified as a death grant and if it was paid over a longer period it would likely be reclassified as a survivor benefit.
Cruse also raised issues about the conditionality attached to the benefit in respect of requirements to look for work and advocated arrangements similar to those which apply to kinship carers.
The Department noted that conditionality is not attached to the benefit except if a claim for Universal Credit is made and that, even under these circumstances, DWP has indicated that flexibility will be shown to claimants for one month every six months over a maximum period of two years.
Cruse also suggested that a bereaved person with no children would benefit more than a bereaved person with children. However, officials stated that under the new benefit a person with no children will get a lump sum of £2500 and a monthly payment of £150 month whereas a person with a child will receive up to £5000 lump sum and up to £400 month.
The Department noted that the assumption that a bereaved person with no children would benefit more than a bereaved person with children is only correct if based on a comparison between the proposed system and the current system (in which there are longer payment periods for children).
Cruse also expressed concern that unmarried partners with children will be ineligible for Bereavement Support Payment. Members of the Committee also queried this but the Department noted that this was due to the practical difficulties in establishing / verifying the bona fides of such relationships.
Following the oral briefing, Cruse submitted a subsequent written submission outlining in detail its proposals for a cost neutral revision of how bereavement support could be paid out. This submission is included at appendix 3.
The Committee considered this subsequent submission. Although it does not propose amendments to the Bill, the Committee noted that Cruse will continue to engage with Westminster and the Committee may have the opportunity to reconsider some of these proposals whenever the regulations relating to the Pensions Bill are introduced.
Part 6: Private Pension (Clause 32 – 54)
Disclosure of information about transaction costs
On this matter, the Committee specifically expressed concern over the wording of the clause, in which it states that “The Department must make regulations … requiring information about some or all of the transaction costs of a relevant scheme to be given to some or all of the persons mentioned in subsection (2)” [emphasis added].
The Committee was concerned about the reason for using the term “some or all” and sought clarification on the reason for this drafting.
The Department clarified that this particular wording is used to ensure consistency with the duty of the Financial Conduct Authority under the Financial Services and Markets Act 2000 to make rules requiring the disclosure and publication of some or all transaction costs for personal pension schemes.
The Department noted that it is not yet known which of the various costs a scheme will be required to disclose and that, in terms of parity, there could be serious implications with changing the wording of the clause. As many schemes are based in England, if the NI legislation was to require the disclosure of ‘all’ information, it would be difficult to enforce and may lead to schemes based in England pulling out of NI.
The Committee was satisfied with the Department’s explanation of this wording and somewhat reassured by the fact that the extent of ‘some’ and a precise definition or what constitutes ‘transaction costs’ would be set out in regulations, which will come before the Committee in due course.
Power to prohibit offer of incentives to transfer pension rights
Members of the Committee sought detail of any indication as to whether the Voluntary Code of Practice is being adhered to and details of monitoring and / or review of adherence to this code, whether planned or already undertaken.
The Department provided the explanation that defined benefit and hybrid schemes have to disclose when they have undertaken an ‘incentive exercise’ or invitation to members to transfer or modify their scheme benefits.
An Incentive Exercises Monitoring Board has also been established that will monitor and report on the effectiveness of the Code by June 2015. DSD and DWP will consider need to exercise the regulation-making power.
The Committee will seek further information on the makeup of the monitoring board and seek updates on its progress.
During the Committee’s consideration of the Bill, a number of issues were raised outside the stakeholder evidence sessions.
The Committee highlighted the importance of making sure that informal carers receive credit for their work and this contributes to the number of qualifying years. The Department provided assurance that this information should be captured regardless of whether somebody claims carers’ benefit as other benefits such as ESA and JSA will contribute towards qualifying years.
The Committee noted concern expressed by NILGA that the main implication of the Bill for local government will be an increase in the National Insurance contribution, adding approximately 3% to the salaries and wages bill for councils. They noted that this is an additional issue to be considered by the district rate, in the current dynamic environment for councils and council finances arising from rates convergence and transfer finance issues.
The Committee was satisfied with the Department’s response that financial impacts on Departments will be considered as part of the next Spending Review and commented that any provisions made for Departments in Great Britain should have a “Barnett” consequential for NI.
The Committee held a session on 29 January 2015, one week prior to the formal clause-by-clause, to discuss its consideration to date and clarify some issues with DSD officials.
The Committee was content that its discussions about the Bill were extensive and the issues raised by stakeholders had been sufficiently addressed by the Department.
The Committee undertook its formal clause-by-clause scrutiny of the Pensions Bill on 5 February 2015 which proceeded as follows.
Clause 1: State Pension
Clause 1 creates a benefit called state pension for people who reach state pension age from 6 April 2016.
The Committee, NIPSA and COPNI expressed concerns that with the introduction of the new state pension, women were likely to be worse off than men, and that those close to state pension age were likely to be adversely impacted as they would find it challenging to plan for retirement.
The Committee was satisfied with how DSD addressed this issue, including the commitment by the SSA to carrying out a clear, effective and extensive communication programme.
At its meeting on 5 February 2015 the Committee agreed that it was content with Clause 1 as drafted.
Clause 2: Entitlement to state pension at full or reduced rate
Clause 2 sets out the basic entitlement conditions under the new scheme.
The Committee noted stakeholders’ concerns about the impact of the increase in qualifying years and particularly how this would impact people with multiple part-time jobs or those on zero hours contracts. The Committee noted the Department’s response and as a result will liaise with the Department on the progress made by DWP and HMRC in implementing arrangements to capture information about those working multiple part-time jobs to ensure that they attain qualifying years.
At its meeting on 5 February 2015 the Committee agreed that it was content with Clause 2 as drafted.
Clause 3: Full and reduced rates of state pension
Clause 3 provides the full rate of state pension to be specified in regulations (which will be subject to the confirmatory procedure and require Assembly approval). Once set, the rate cannot be reduced.
At its meeting on 5 February 2015 the Committee agreed that it was content with Clause 3 as drafted.
Clause 4: Entitlement to state pension at transitional rate
Clause 4 provides for a transitional rate of new state pension and sets out the conditions that a person must satisfy to be entitled to it.
At its meeting on 5 February 2015 the Committee agreed that it was content with Clause 4 as drafted.
Clause 5: Transitional rate of state pension
Clause 5 complements Clause 4 and sets out the basic calculation of the transitional rate of state pension and cross refers to other provisions in the Bill.
At its meeting on 5 February 2015 the Committee agreed that it was content with Clause 5 as drafted.
Clause 6: Recalculation and backdating of transitional rate in special cases
Clause 6 is a technical provision that enables the transitional rate of the state pension to be adjusted after a person reaches state pension age – to reflect backdated changes made to the person’s National Insurance record.
At its meeting on 5 February 2015 the Committee agreed that it was content with Clause 6 as drafted.
Clause 7: Survivor’s pension based on inheritance of additional old state pension
Clause 7 makes transitional arrangements for the inheritance of a deceased spouse’s or civil partner’s current scheme additional state pension.
At its meeting on 5 February 2015 the Committee agreed that it was content with Clause 7 as drafted.
Clause 8: Choice of lump sum or survivor’s pension under section 9 in certain cases
This clause sets out the qualifying conditions for the choice to inherit either a lump sum or survivor’s pension from a late spouse or civil partner.
At its meeting on 5 February 2015 the Committee agreed that it was content with Clause 8 as drafted.
Clause 9: Survivor’s pension based on inheritance of deferred old state pension
Clause 9 follows on from Clause 8 and replicates the existing legislation by setting out the qualifying conditions for inheritance of a survivor’s pension from a late spouse or civil partner where the deceased had deferred their old scheme state pension.
At its meeting on 5 February 2015 the Committee agreed that it was content with Clause 9 as drafted.
Clause 10: Inheritance of graduated retirement benefit
Clause 10 provides a regulation-making power that will set out the circumstances in which a new state pension recipient may inherit entitlement to Graduated Retirement Benefit.
At its meeting on 5 February 2015 the Committee agreed that it was content with Clause 10 as drafted.
Clause 11: Reduced rate elections: effect on section 4 pensions
Clause 11 provides transitional arrangements to address the impact of abolishing entitlement to basic pension for women who opted to pay the ‘married woman’s stamp’.
At its meeting on 5 February 2015 the Committee agreed that it was content with Clause 11 as drafted.
Clause 12: Reduced rate elections: pension for women with no section 4 pension
Clause 12 provides transitional arrangements for women with a reduced-rate election in force within 35 years of reaching pension age but with no qualifying years prior to 6 April 2006.
At its meeting on 5 February 2015 the Committee agreed that it was content with Clause 12 as drafted.
Clause 13: Shared state pension on divorce etc
Clause 13 allows sharing of some state pension (essentially the equivalent of the current additional pension) between divorcing couples, by creating a pension credit.
At its meeting on 5 February 2015 the Committee agreed that it was content with Clause 13 as drafted.
Clause 14: Pension sharing: amendments
Clause 14 creates a pension debit and allows a person’s pension to be reduced to comply with the state scheme pension debit or the state pension credit.
At its meeting on 5 February 2015 the Committee agreed that it was content with Clause 14 as drafted.
Clause 15: Pension sharing: amendments
Clause 15 introduces Schedule 11 which amends the relevant legislation to reflect the introduction of the new state pension scheme and to give effect to pension sharing under the new scheme in transitional rate cases.
At its meeting on 5 February 2015 the Committee agreed that it was content with Clause 15 as drafted.
Clause 16: Pensioner’s option to suspend state pension
Clause 16 permits a pensioner in the new scheme to qualify for an increment by suspending their entitlement to a new state pension for a period of time. It replicates existing arrangements for old scheme pensioners.
At its meeting on 5 February 2015 the Committee agreed that it was content with Clause 16 as drafted.
Clause 17: Effect of pensioner postponing or suspending state pension
Clause 17 provides for what happens as a result of a person choosing not to claim their new state pension or choosing to give up their new state pension for a period after it has been awarded and stipulates the criteria to be satisfied in order for a new state pension to be delivered.
At its meeting on 5 February 2015 the Committee agreed that it was content with Clause 17 as drafted.
Clause 18: Section 17 supplementary: calculating weeks, overseas residents etc.
Clause 18 contains powers to modify the calculation of the increment due when a person has received another social security benefit, or if there has been a change of circumstances during the period of deferral.
At its meeting on 5 February 2015 the Committee agreed that it was content with Clause 18 as drafted.
Clause 19: Prisoners
Clause 19 provides that where a person is imprisoned or in lawful custody or unlawfully at large, pension is not payable.
At its meeting on 5 February 2015 the Committee agreed that it was content with Clause 19 as drafted.
Clause 20: Overseas residents
Clause 20 provides regulation-making power to provide that overseas residents are not entitled to up-rating, depending on their country of residence. This mirrors the current policy.
At its meeting on 5 February 2015 the Committee agreed that it was content with Clause 20 as drafted.
Clause 21: “Old state pension”
Clause 21 defines “old state pension” as used in Part 1 of the Bill as a Category A or a Category B retirement pension.
At its meeting on 5 February 2015 the Committee agreed that it was content with Clause 21 as drafted.
Clause 22: General definitions etc
Clause 22 provides general definitions of terms used in Part 1 of the Bill.
At its meeting on 5 February 2015 the Committee agreed that it was content with Clause 22 as drafted.
Clause 23: Amendments
Clause 23 introduces Schedule 12, which contains amendments relating to the introduction of the new state pension.
At its meeting on 5 February 2015 the Committee agreed that it was content with Clause 23 as drafted.
Clause 24: Abolition of contracting-out for salary related schemes etc
Clause 24 gives effect to Schedule 13, which contains amendments to abolish contracting-out for salary-related schemes. Contracting-out ends because under the new state pension there will be no state second pension to contract out of.
At its meeting on 5 February 2015 the Committee had some queries on this clause, but were content that they were addressed adequately by the Department during consideration of the Bill.
The Committee agreed that it was content with Clause 24 as drafted.
Clause 25: Option to boost old retirement pensions
Clause 25 gives effect to Schedule 15 to the Bill, which contains amendments to the Social Security Contributions and Benefits Act 1992 and allows for the payment of extra units of additional state pension to individuals who have made Class 2A voluntary National Insurance contributions.
At its meeting on 5 February 2015 the Committee agreed that it was content with Clause 25 as drafted.
Clause 26: Increase in Pensionable Age
Clause 26 brings forward the increase in pensionable age to 67 to take place between
6 April 2026 and 5 March 2028.
The Committee raised concerns during consideration stage that this clause would allow for subsequent increases in the pension age beyond 67, but were content with the Department’s confirmation that in fact it would be necessary to introduce new primary legislation to increase the pension age any further.
At its meeting on 5 February 2015 the Committee agreed that it was content with Clause 26 as drafted.
Clause 27: State pension credit: phasing out assessed income periods
Clause 27 makes amendments to the State Pension Credit Act 2002 to provide for the abolition of the assessed income period in Pension Credit cases from 6 April 2016.
At its meeting on 5 February 2015 the Committee agreed that it was content with Clause 27 as drafted.
Clause 28: Preserving indefinite status of certain existing assessed income periods
Clause 28 clarifies that existing indefinite AIPs remain valid.
At its meeting on 5 February 2015 the Committee agreed that it was content with Clause 28 as drafted.
Clause 29: Bereavement Support Payment
Clause 29 provides for replacement of current bereavement benefits with Bereavement Support Payment.
At its meeting on 5 February 2015 the Committee agreed that it was content with Clause 29 as drafted.
Clause 30: Bereavement Support Payment: Contribution Condition and Amendments
Clause 30 makes provision for the contribution condition to be treated as met if the deceased was an employed earner and died as a result of a personal injury or prescribed disease.
At its meeting on 5 February 2015 the Committee agreed that it was content with Clause 30 as drafted.
Clause 31: Bereavement Support Payment: Prisoners
Clause 31 gives the Department the power to make regulations to disqualify prisoners from receiving Bereavement Support Payment.
At its meeting on 5 February 2015 the Committee agreed that it was content with Clause 31 as drafted.
Clause 32: Automatic transfer of pension benefits etc
Clause 32 and Schedule 17 require the Department to make regulations to establish a system of automatic transfers of pension pots less than £10k if a person is no longer contributing but is an active member of another scheme.
At its meeting on 5 February 2015 the Committee agreed that it was content with Clause 32 as drafted.
Clause 33: Power to prohibit offer of incentives to transfer pension rights
Clause 33 provides a reserve power to allow regulations to be made to prohibit incentives being offered to members of salary-related schemes to transfer their rights to another scheme or arrangement.
At its meeting on 5 February 2015 the Committee agreed that it was content with Clause 33 as drafted.
Clause 34: Expiry of power in section 33
Clause 34 provides for the automatic repeal of Clause 33 after 7 years should no regulations been made under that clause in that time.
At its meeting on 5 February 2015 the Committee agreed that it was content with Clause 34 as drafted.
Clause 35: Short service benefit for scheme member with money purchase benefit
Clause 35 ensures that there will be an entitlement to a ‘short service benefit’ immediately after a member has completed 30 days’ qualifying membership of the scheme.
At its meeting on 5 February 2015 the Committee agreed that it was content with Clause 35 as drafted.
Clause 36: Automatic re-enrolment: exceptions where automatic enrolment deferred
Clause 36 removes the duty to re-enrol an eligible individual during a period when automatic enrolment has been validly postponed or deferred.
At its meeting on 5 February 2015 the Committee agreed that it was content with Clause 36 as drafted.
Clause 37: Automatic Enrolment: powers to create general exceptions
Clause 37 contains a power to give the employer the choice of whether or not to exclude prescribed types of workers from the scope of automatic enrolment but not on the basis of the type/size of employer.
At its meeting on 5 February 2015 the Committee agreed that it was content with Clause 37 as drafted.
Clause 38: Alternative quality requirements for UK defined benefits schemes
Clause 38 introduces alternative quality requirements for defined benefit schemes in order to make it easier for such schemes to demonstrate that they are good enough to be used for automatic enrolment.
At its meeting on 5 February 2015 the Committee agreed that it was content with Clause 38 as drafted.
Clause 39: Automatic enrolment: transitional period for hybrid schemes
Clause 39 clarifies the law which sets out transitional arrangements for implementing automatic enrolment into workplace pension arrangements for hybrid schemes.
At its meeting on 5 February 2015 the Committee agreed that it was content with Clause 39 as drafted.
Clause 40: Penalty notices
Clause 40 reinstates the original policy intention that a penalty notice under the Pensions (No 2) Act (NI) 2008 for non-compliance with information requirements can only be used in relation to employer duties under Part 1 of that Act.
At its meeting on 5 February 2015 the Committee agreed that it was content with Clause 40 as drafted.
Clause 41: Unpaid scheme contributions
Clause 41 amends the Pension Schemes (NI) Act 1993 to extend the protection currently available under section 119 (regarding unpaid pension contributions where an employer becomes insolvent) to workers, such as agency workers as well as to employees.
At its meeting on 5 February 2015 the Committee agreed that it was content with Clause 41 as drafted.
Clause 42: Power to restrict charges or impose requirements
Clause 42 gives effect to Schedule 18, which sets out the detail to allow the Department to make regulations to set quality standards and restrict charges in work-based pension schemes.
At its meeting on 5 February 2015 the Committee agreed that it was content with Clause 42 as drafted.
Clause 43: Disclosure of information about transaction costs to members etc
Clause 43 places duties on the Department to make regulations that require the disclosure of certain information about the transaction costs incurred by money purchase pension schemes.
Members had concerns about the wording of this clause, but were satisfied with the Department’s explanation for this.
At its meeting on 5 February 2015 the Committee agreed that it was content with Clause 43 as drafted.
Clause 44: Power to require pension levies to be paid in respect of past periods
Clause 44 allows regulations ensuring compliance in payment of Pension Protection Fund (PPF) levies to be deemed always to have had effect. This is to comply with EU law.
At its meeting on 5 February 2015 the Committee agreed that it was content with Clause 44 as drafted.
Clause 45: Prohibition and suspension of orders: Directors of Corporate Trustees etc
Clause 45 and Schedule 19 build on the existing prohibition regime, closing a loophole whereby, as it stands, a person who is prohibited from being a trustee as not a fit and proper person can be a director of a company which acts as a trustee.
At its meeting on 5 February 2015 the Committee agreed that it was content with Clause 45 as drafted.
Clause 46: Pensions Regulator’s objectives
Clause 46 sets out an additional objective for the Pensions Regulator, which states that when carrying out its functions in relation to scheme funding, the Pension Regulator should minimise any adverse impact on the sustainable growth of sponsoring employers – putting on a statutory basis what has already been implicit.
At its meeting on 5 February 2015 the Committee agreed that it was content with Clause 46 as drafted.
Clause 47: Maximum period between scheme returns to be 5 years for micro schemes
Clause 47 increases the maximum period between scheme returns to five years for schemes that have no more than four members.
At its meeting on 5 February 2015 the Committee agreed that it was content with Clause 47 as drafted.
Clause 48: Pensions Protection Fund: increased compensation cap for long service
Clause 48 introduces Schedule 20 to provide for a revised compensation cap dependent on a person’s age and length of pensionable service when the person first becomes entitled to compensation.
At its meeting on 5 February 2015 the Committee agreed that it was content with Clause 48 as drafted.
Clause 49: Pension Protection Fund: compensation cap to apply separately to certain benefits
Clause 49 relates to the application of the PPF compensation cap to individuals who have entitlement to both an occupational pension and to a pension credit arising from a divorce or civil partnership.
At its meeting on 5 February 2015 the Committee agreed that it was content with Clause 49 as drafted.
Clause 50: Consequential amendments
Clause 50 provides for a power to make, by order, provisions which are consequential, incidental or supplementary in relation to any provision of the Bill.
At its meeting on 5 February 2015 the Committee agreed that it was content with Clause 50 as drafted.
Clause 51 makes general provision in respect of the regulations and orders that will be made under powers of the Bill.
At its meeting on 5 February 2015 the Committee agreed that it was content with Clause 51 as drafted.
Clause 52 is an interpretation clause and is purely technical.
At its meeting on 5 February 2015 the Committee agreed that it was content with Clause 52 as drafted.
Clause 53: Commencement
Clause 53 provides for commencement of certain provisions of the Bill.
At its meeting on 5 February 2015 the Committee agreed that it was content with Clause 53 as drafted.
Clause 54: Short title
Clause 54 provides for a short title to the Bill.
At its meeting on 5 February 2015 the Committee agreed that it was content with Clause 54 as drafted.
At its meeting on 5 February 2015 the Committee agreed that it was content with Schedules 1 – 20 as drafted.
Long title of the Bill
At its meeting on 5 February 2015 the Committee agreed the long title as drafted.