The Queen’s Speech was delivered at the state opening of Parliament yesterday. It came as no surprise that one of the main areas of focus was Brexit. The speech confirmed that there will be a Repeal Bill, Trade and Customs Bills, Agriculture and Fisheries Bills, an Immigration Bill and a Nuclear Safeguards Bill. Turning to the general economy, the government will raise the national living wage to 60% of median earnings by 2020 and further after 2020. It will also take further steps to tackle the gender pay gap and discrimination on grounds of race, faith, gender, disability or sexual orientation. You can find more information in our employment insight.
Trustees and employers should note these changes. There will also be:
A Financial Guidance and Claims Bill
This Bill will establish a Single Financial Guidance Body to replace The Pensions Advisory Service, Pension Wise and the Money Advice Service, with the aim of reducing duplication and delivering better value for money. We discussed the Single Financial Guidance Body in our Q4 2016 Action Plan.
A Data Protection Bill
Amongst other things, this Bill will implement the General Data Protection Regulation (GDPR). Implementing the GDPR will ensure that we meet “our obligations while we remain an EU member state” and help “to put the UK in the best position to maintain our ability to share data with other EU members states and internationally after we leave the EU”.
Trustees and employers should already be preparing for the General Data Protection Regulation, which will take effect next May. If you would like more information on how we can help you with this, please contact Jonathan Hazlett or Jennifer Cave.
Three Finance Bills
In our Q2 2017 Pensions Action Plan, we explained that two pensions tax proposals were set aside in the rush to finalise and adopt legislation before Parliament was dissolved just after midnight on 3 May 2017. These were the reduction of the Money Purchase Annual Allowance from £10,000 to £4,000, and a new and increased income tax exemption for employer-arranged financial advice. It is not yet clear whether the new Finance Bills will address these points.
The Queen’s Speech also leaves some other pensions questions unanswered:
Pension scams, mismanagement and the state pension
It is not clear what will happen in terms of legislation to ban cold calling and introduce other measures to deal more effectively with pension scams.
Nor it is clear what will happen in relation to the following matters, all addressed in the Conservative Party election manifesto:
- increasing the punishment for business owners who mismanage pension schemes and to build on existing powers to give pension schemes and the Pensions Regulator the right to “scrutinise, clear with conditions or in extreme cases stop mergers, takeovers or large financial commitments that threaten the solvency of the scheme”;
- keeping the Triple Lock on the state pension until 2020 and then replacing it with a ‘Double Lock’ of the greater of the rise in earnings or inflation;
- ensuring that “the stage pension age reflects increases in life expectancy, while protecting each generation fairly”;
- continuing to “extend auto-enrolment to small employers and make it available to the self-employed”; and
- promoting long-term savings and pensions products, including the Lifetime ISA.
The Queen’s Speech provides some helpful confirmation in relation to a Single Financial Guidance Body and the GDPR. However, the general election has led to some delay in proposals to address pension scams. It is also not clear on what timeline the government will publish a response to the consultation on its green paper ‘Security and Sustainability in Defined Benefit Pension Schemes’ (the consultation period for which ended on 14 May 2017). In view of the outcome of the election, we wait to see how proposals in relation to the state pension (whether the Triple Lock will be maintained, and or whether there will be a further increase in the state pension age) develop under the new government.