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   Pensions Bill 2004
  Pensions Bill 2004
  Introduction   Additional measures
  Operation of schemes   Improving member protection
  Promoting pensions   Taking State Pension late

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The Pensions Bill was published on 12th February 2004 and developed themes announced by the Department for Work and Pensions to empower people to take control of their retirement planning. It created the Pension Protection Fund designed to compensate members of defined benefit and hybrid schemes whose employers become insolvent. The Pensions Bill introduced a new Pensions Regulator with aims to make it easier for companies to operate schemes. The Bill provided more choice and a better deal for people who choose to draw their state pension later including a new option to take a lump sum.

Improving member protection
The new Pension Protection Fund (PPF) is designed to safeguard benefits build-up in final salary schemes but Andrew Smith, secretary of state for Works and Pensions, said the fund will not 'guarantee' the members' pension pots if their company collapses.

He said "where companies with under-funded pensions have gone bust, workers have found themselves severely short-changed on the pension they were expecting, with the Pension Protection Fund, people in pension schemes can be much surer that they will get the pension they were promised".

The Pensions Bill aims:

  Establishing the Pension Protection Fund (PPF);
  Establishing the PPF Ombudsman;
  Establishing the Pensions Regulator;
  Establishing the Pensions Regulator Tribunal;
  Scheme funding - striking a balance between schemes' long-term liabilities and the assets they are required to hold on an on-going basis;
  Pension Protection on transfer of employment
Specifying the debt to the pension scheme to the pension scheme in the case of an employer's insolvency with insufficient assets.

Operation of schemes
The new Pensions Regulator that replaces the Occupational Pensions Regulatory Authority (OPRA) will focus on the under-funding, fraud and mal-administration that can threaten members' benefits, whilst minimising interference for the well run schemes.

Employers will have less red tape through simplification measures, making it easier to offer pension schemes to employees. Schemes can set their own investment strategy and there will be simplified regulations for trustees, dispute resolution and contracting-out.

The Pension Bill aims:

  Mechanism for resolving disputes between schemes trustees and scheme members;
  Changing the rules on limited price indexation so that it is capped at 2.5% instead of 5%;
  Modifications to rules for private pension schemes which are contracted out of the State Second Pension (previously SERPS);
  Clarifying that overpayments of pension benefits may be recouped through deductions from future payments.

Taking State Pension late
The age at which people start to receive their state pension will remain 65 and nobody will be forced to work beyond that age. However, rewards will be given to people that choose to defer taking their state pension.

The Pensions Bill aims:

  Better enhancements to the pension where it is deferred ;
  A lump sum option ensuring schemes are run for their members;
  At least one third of scheme trustees must be nominated by the scheme members;
  Trustees must inform members of their investment principles;
  Trustees must have knowledge about the issues that they deal with;
  Ensuring that pension contributions, in particular by employers, are made in good time.

Promoting pensions
The Pension Bill will allow the promotion of financial planning for an individuals retirement. This will include estimating the financial resources the individual will need after retirement, the resources available from pensions and other sources and what action might be taken to increase the financial resources available to the individual after retirement.

The Pensions Bill aims:

  Promoting and facilitating financial planning for retirement, including introducing an online retirement planner;
  Making it compulsory for occupational pension schemes to provide combined pension forecasts if sufficient numbers do not take up this option voluntarily;
  At least one third of scheme trustees must be nominated by the scheme members;
  Requiring employers to provide access to information and advice in the workplace if the pilots indicate that this helps people to make better choices about the retirement planning;
  Extending data sharing gateways between DWP and other bodies to allow Departmental analysts to use the data for policy modeling and development with respect to private pensions.

Additional measures

The Pensions Bill also aims to:

  Safeguarding the accrual of pension rights during periods of paid statutory paternity and adoption leave;
  Clarifying the ways in which revaluation of accrued pension rights can be calculated;
  Clarifying definitions with respect to stakeholder pensions;
  Clarifying that where a person is entitled to more than one of the same category of retirement pension, they can choose in writing as to which of these retirements pensions they wish to receive. In the event of no written notice being given, they will be entitled to the one which is most favourable to them;
  Regularising the payments of certain UK benefits including retirement pensions, Widow's Benefits and Bereavement Benefits to people with protected National Insurance contributions records due to periods of Australian residence.
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