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BeeHive  >  BeeLines  >  Map to the future

Map to the future

I get so many people asking me about what’s going to happen next in pensions that I thought it would be a good idea just to jot down a brief overview of the likely sequence of events we’re going to get in the run-up to A-Day. Nothing too technical, just a pointer to the key events and the likely dates.

First things first, though, and to make sure everybody’s up to speed with where we are now, a potted history of what’s happened so far.

Last December we were treated to two very important Christmas presents. One was the Pensions Green Paper from the Department for Work and Pensions (the DWP) and the other was a consultation document on the simplification of the pensions tax laws from the Inland Revenue. It was my best Christmas ever. The two papers were called, respectively, ‘Simplicity, security and choice: Working and saving for retirement’, and ‘Simplifying the taxation of pensions: increasing choice and flexibility for all’.

Now, these things weren’t just idle musings published to give us all something to talk about over the holiday period, they were the first stage in the production of new and far-reaching changes to the legislation supporting our pensions environment in the UK. In effect they were both ‘Green Papers’. Green Papers are precursors to ‘White Papers’, which become ‘Bills’ and eventually mutate into ‘Acts’ of Parliament. We then call them ‘laws’. The two papers were both consultation documents in the sense that they asked for comments from interested parties on a number of specific points raised in the documents themselves. The periods of consultation were slightly different with the DWP requiring comments by 28 March 2003 and the Revenue a few weeks later on 11 April.

Well, that’s all water under the bridge now, the consultation periods have closed and things are moving on. We still haven’t really had any proper feedback from the Government resulting from the consultation process, but we did have the rather surprising paper from the DWP on 11 June when it responded itself to its own Green Paper and made a number of immediate changes to the way solvent employers could go about closing occupational pension schemes. It was a bit of a surprise to me anyway.

The DWP also announced on 11 June that A-Day (the day when all these changes will be implemented and become laws) has been set as being 6 April 2005. That was a bit of a relief to be honest, as the original proposal in the Green Paper was that everything should change on 6 April 2004, or to put it another way, soon. Pushing it out to 2005 at least gives us a chance to get our business in order and make sure our clients are properly advised in time. Or at least it will do, as long as we find out very soon what the exact changes the Government intends bringing in on 6 April 2005 are. We need precise details of what these changes are going to be before we can do anything sensible, so they really do need to get on with it and let us know asap.

So that’s where we are today and, presumably, why so many people now keep asking me questions along the lines of, “So what happens next then?” Well, what we’ve been told to expect is that we will get a further round of consultation “in the summer”. Now, I don’t know what the weather’s been like around your way lately, but the Bee household has more or less decamped into the garden because of the soaring temperatures, and we’re currently having the kind of weather that makes me think that the summer is where we’re at right now. But we haven’t had the promised consultation documents yet. To be honest it’s now looking more likely to be September or October before we’ll see anything. Some draft clauses of legislation would be nice. That kind of thing.

But November now looks like being the big date. It’s then that we’ll get to see the first draft of the new Pensions Bill which will almost certainly be announced in the Queen’s Speech when she officially kicks-off the next session of Parliament. The Pensions Bill will eventually become the 2004 Pensions Act and will be a milestone piece of legislation. That will go through sometime between November this year and July next, and may well be accompanied by separate strands of consultation on detail. In tandem with this we will get the 2004 Finance Act which will be used to implement the radical (and retrospective) changes to our tax laws from April 2005. It is possible we will see the details of this pretty much laid out this side of Christmas, perhaps with the publication by Government of draft legislation. I hope so, because that’s the level of detail we will need to have before we can get going with advising people.

There is a real chance, though, that some of the detail we will need to know may not be published with all the “i’s” dotted and all the “t’s” crossed well in advance of A-Day in April 2005. Quite a bit of our recent pensions legislation (that leading up to the implementation of Stakeholder Pensions, for instance) was published in the form of ‘delegated legislation’. What this is, is a way of filling-in the fine detail that is required for an ‘Act’ after the ‘Bill’ is published, but before the ‘Act’ is. A bit like the middle pieces of a jigsaw being put in place after the edges have been done first. I do hope we don’t find out the full detail of all these important changes in a piecemeal fashion this time, because it is so important we know exactly what to say to people in plenty of time for them to take action. But we’ll see.

Whatever way it does pan out, though, we’re certainly set for a busy time of it pensions changes-wise over the next year or so, and if you’re of a mind to you can follow the ins and outs of it blow by blow right here on the BeeHive. While you keep reading them, I’ll keep writing them. Ciao!

Steve Bee
14 August 2003

The information provided is based on Scottish Life’s current understanding of the relevant legislation and regulations and may be subject to alteration as a result of changes in legislation or practice.