Register for updates

Sign up to get the latest BeeLines sent direct to your inbox. You can unsubscribe later if you wish.

BeeHive  >  BeeLines  >  Parts of the 2004 Pensions Act that come into force on 6th April 2005

Parts of the 2004 Pensions Act that come into force on 6th April 2005

I know you probably haven’t forgotten, but tomorrow (6th April 2005) would have been A-Day if the Government had gone ahead with its original plan.  Actually, that wasn’t even its original plan now I come to think of it.  To start with, A-Day was supposed to have been a year ago on 6th April 2004 if you remember – it all seems such a long time ago now doesn’t it?

Still, something akin to commonsense applied in the end and A-Day is now set to be 6th April 2006 instead, still too early in my opinion, but better than if it were to be tomorrow I suppose.  The 2004 Pensions Act, as you also know, finally hit the streets right at the end of last year and indeed, quite a bit of the detail that it didn’t contain is still busily being written by Government scribes even as we speak.  So in the circs it’s just as well A-Day wasn’t last year really isn’t it?

The Pensions Act is interesting, though, because it is going to come on in bits and pieces, with some parts aimed at A-Day in 2006, but others aimed at where A-Day was going to be – tomorrow, April 6th 2005.

I was just making a list of all the various bits of the Pensions Act that come into force tomorrow, you know just in case I’m at a dinner party over the next few weeks and the subject comes up.  It’d be pretty impressive just to rattle the detail out I think.  Anyway, I’ve done the list and having done it thought I had may as well put it on the BeeHive in case you get caught up in a dinner party and you could use it too.  (Incidentally, if we’re ever both at the same dinner party and you feel you’d like to bring up the subject of the Pensions Act, I’d just as soon we stuck to talking about football if that’s all right with you.)

First off, the Pension Protection Fund (PPF) finally gets up and running tomorrow.  As you’ll know, this is a kind of massive catch-all scheme that will be run to pick up the remnants of final-salary pension schemes that are left over when employers become insolvent.  The PPF will be funded by an annual levy on all other final-salary schemes, but the Government is not prepared to be a guarantor of the benefits in the last resort, so it’ll be just like any other pension scheme in many respects.  I’ve written plenty of BeeLines about the PPF and the way it will operate and if you’d like to get up to speed with that prior to tomorrow’s launch you can do that by following the link here to the latest of them:

Pension protection fund levy

The new Pensions Regulator comes into being tomorrow too, and OPRA, the old pensions regulator rides off into the sunset.  The new regulator comes equipped with loads of new ideas as to how pension schemes should be run and how it will keep tabs on what’s going on.  It has set out three broad objectives that will define its role and these are:

  1. That it will protect members’ benefits.
  2. It will be proactive in reducing the risk of bad situations arising in the first place (something I’ve previously referred to as a pension problem radar system).  This is obviously going to be key in protecting the PPF from claims that could otherwise be averted.
  3. It will devote its energies to promoting and improving pension knowledge and understanding of pensions.

The new regulator also introduces new stuff around the so-called ‘moral hazard’ provisions and whistleblowing and notifiable events.  I wrote a BeeLine or two recently about these and for all I know you might like to catch up with them again by clicking on the following links.  If you do, here they are:

Trustees and Notifiable Events

New Trustee Knowledge Requirements

One of the other changes coming in tomorrow in advance of A-Day next year is the change to the way that pensions will be required by law to increase in payment.  At the moment there is a confusing array of rules and regulations governing different tranches of pension benefit built up in the past and each with differing rates of escalation attached to them.  For money-purchase scheme pensions coming into payment from tomorrow these complex requirements are being removed completely.  For final-salary pensions coming into payment after tomorrow, however, the current complex array of requirements is simply being replaced by a different array of complex requirements.  I’m not going to go into all that again here, but anyone who wants to do their head in with the detail is free to follow this next link to my comprehensive BeeLines on the subject:

Pension increases after April 2005

Pension Increases After April 2005: Take Two!

There are also changes coming into force tomorrow to the way pension rights are to be protected on transfer of employment.  This is all to do with the responsibilities that will now be placed on some employers when they take over another company and that company’s employees have existing pension rights through their employment.  The new Transfer of Employment (Pension Protection) Regulations come into force tomorrow as a consequence of the Pensions Act 2004.  I know you know I’ve written about all this before, but just in case some of you weren’t paying proper attention back then I’ve put two links below so that you can catch up on the detail from those BeeLines:

A fistful of regulations

Pension radar service special - including the Finance Bill 2005!

So, that’s it really.  If the question is “What parts of the Pensions Act 2004 were implemented on 6th April 2005?”, you can answer, quick as a flash “There were four main bits really; The Pension Protection Fund; The new Pensions Regulator; The changes to the way pensions are required to escalate; and, The tarting up of the old TUPE stuff to include pensions at last”.  If that ever comes up on Mastermind in the general knowledge bit I’d hope every BeeLiner watching will get the answer blurted out before the old duffer in the chair has time to say “Pass!”

Steve Bee

5 April 2005


This document is based on Scottish Life's current understanding of the Pensions Act 2004. This may be affected by future changes in legislation and the individual circumstances of the investor. Independent advice must be sought regarding the effect on a specific scheme.