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The Pensions Faculty

Issue 47 February 2014

The magazine of The Pensions Faculty produced in association with Hymans Robertson LLP

2013 Autumn Statement

The Chancellor of the Exchequer, George Osborne, in delivering his Autumn Statement on the government’s plans for the economy was rather light on pension-related matters – perhaps mercifully so – by comparison to recent such speeches

fter the pension tax turmoil of recent years, it comes as something of a relief to say that there were no great shocks in the statement.

A State pensions

A planned cap on welfare spending will not affect the basic state pension (BSP). The operation of the ‘triple lock’ formula will see the BSP increase in 2014, in accordance with consumer price indexation inflation, by 2.7 per cent (£2.95 per week); the standard

pension credit guarantee will rise by the same cash amount. Further increases to state pensionable age

Money purchase benefits redefined

News Double-counting

Money purchase illustrations standard under review 2013 ‘Purple Book’

DC governance code in force

(SPA) are anticipated. Although the details will only be fixed following statutory reviews, based on current life expectancy data SPA would be expected to be 68 for those retiring in the mid-2030s, and 69 by the late 2040s; however, new life expectancy projections will be available by the time when the first review takes place. (That first statutory review, under what will become the Pensions Act 2014, will take place at some time during the Parliament that is due to begin in 2015; and in any event must be published before 7 May 2017.) The Department for Work and Pensions

(DWP) has published some information on the technical basis for the review. In summary, the guiding principle is that people should expect to spend, on average, no more than one-third of their adult lives in receipt of state pension. The DWP will seek to establish and maintain more regular contact with overseas state pensioners, to reduce risk of

overpayments when death goes unreported. NICs

In October 2015, the Government will offer a time-limited opportunity to pay voluntary (Class 3A) national insurance contributions (NICs), to boost additional state pension entitlements. The facility will be open to current pensioners and those who reach SPA before 6 April 2016. The cost will be “broadly actuarially fair”.

Other news Following a review, the government has determined that there should be no change to the basis on which the Government Actuary’s Department formulates its income drawdown tables.

...people should expect to spend, on average, no more than one-third of their adult lives in receipt of state pension

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