Autumn Statement Predictions?

JoeCrystal

Silvertabby said:

That could have been made clearer.  ie, new employers will only be required to pay into previous DC schemes, and not DB schemes.  That said, people will only hear what they want to hear.

From 6 April 2024, self-employed people with profits above £12,570 will no longer be required to pay Class 2 NICs, but will continue to receive access to contributory benefits, including the State Pension.

Those with profits between £6,725 and £12,570 will continue to get access to contributory benefits including the State Pension through a National Insurance credit without paying NICs as they do currently.

Those with profits under £6,725 and others who pay Class 2 NICs voluntarily to get access to contributory benefits including the State Pension, will continue to be able to do so

The main rate of Class 2 NICs is usually uprated by Consumer Price Index (CPI) and therefore had been due to rise to £3.70 per week in April 2024. For those paying voluntarily, the government has decided to maintain the current rate of £3.45 per week for 2024-25.

The government will tackle the long-standing problem of “small pot” pensions and is launching a call for evidence on a lifetime provider model which would allow individuals to have contributions paid into their existing pension scheme when they change employer, providing greater agency and control over their pension.

5.102 Update on saver choices at retirement – The government is publishing an update that proposes placing duties on occupational pensions trustees to offer decumulation services and products at an appropriate quality and price when savers access their pension assets, either themselves or through a partnership arrangement. It also sets out the intention to further explore the development and wider use of Collective DC schemes as part of a long-term vision for pension saving in the UK.

5.103 Call for Evidence on Lifetime Provider Model and small pots consultation response – The government is launching a call for evidence on a lifetime provider model to simplify the pensions market by allowing individuals to move towards having one pension pot for life, and on a potential expanded role for collective defined contribution (CDC) schemes in future. The government will also introduce the multiple default consolidator model to enable a small number of authorised schemes to act as a consolidator for eligible pension pots under £1,000.

5.104 Public consolidator for DB pension schemes – DWP will launch a consultation this winter on options for DB schemes, currently unserved by the market, to consolidate into a new statutory vehicle run by the Pension Protection Fund.   

5.109 Prioritising long-term pension investment performance over low fees – Building on the guidance and commitments made by the Productive Finance Working Group, the government will engage with industry on proposals to ensure that all aspects of the pensions market are playing their part to support best outcomes for savers. This will include how to shift employer incentives away from low fees towards long-term pension investment performance. The Pensions Regulator will provide further information for employers on what factors should be assessed when they are selecting a pension scheme.

These are what I can find on the main document.

Hoenir

Silvertabby said:

JoeCrystal said:

Hunt turns to pension reforms, announcing he will consult on giving people one pension pot for life.

He says he will consult on giving pension savers a "legal right to require a new employer to pay pension contributions into their existing pension".

He says these reforms could help unlock an "extra £1,000 a year in retirement for an average earner saving from 18".

That could have been made clearer.  ie, new employers will only be required to pay into previous DC schemes, and not DB schemes.  That said, people will only hear what they want to hear.

Prior to this part of the announcement. He talked about pension schemes more generally. Did you catch this part in full? Caught references to much larger schemes in the future. 

JoeCrystal

Here is the link to pension reforms documents: https://www.gov.uk/government/collections/autumn-statement-pensions-reform-2023

JoeCrystal

Silvertabby said:

JoeCrystal said:

Hunt turns to pension reforms, announcing he will consult on giving people one pension pot for life.

He says he will consult on giving pension savers a "legal right to require a new employer to pay pension contributions into their existing pension".

He says these reforms could help unlock an "extra £1,000 a year in retirement for an average earner saving from 18".

That could have been made clearer.  ie, new employers will only be required to pay into previous DC schemes, and not DB schemes.  That said, people will only hear what they want to hear.

I think this is covered by this section potentially. So if it is a DB scheme then they won't have to pay into members' existing pension scheme. Still early days though. I don't think any of this will be in effect before the next general election anyway.

133. We anticipate the need for exemptions to the lifetime provider model in circumstances where an employer provides a better offering than the lifetime provider. This would include defined benefit schemes and may include some defined contribution or collective defined contribution single-employer trusts, Master Trusts or Group Personal Pension Schemes that have more generous features in the default than the lifetime provider – for example, a protected pension age, significantly higher than minimum employer contribution levels or tax-free lump-sum. In those circumstances we would want to continue to encourage employers to be more generous to their employees, and so allow them to pay contributions into their own scheme.

Silvertabby

Hoenir said:

Silvertabby said:

JoeCrystal said:

Hunt turns to pension reforms, announcing he will consult on giving people one pension pot for life.

He says he will consult on giving pension savers a "legal right to require a new employer to pay pension contributions into their existing pension".

He says these reforms could help unlock an "extra £1,000 a year in retirement for an average earner saving from 18".

That could have been made clearer.  ie, new employers will only be required to pay into previous DC schemes, and not DB schemes.  That said, people will only hear what they want to hear.

Prior to this part of the announcement. He talked about pension schemes more generally. Did you catch this part in full? Caught references to much larger schemes in the future. 

I was thinking more of Joe Public.  Retired now, but during my time as a LGPS administrator I was asked more times than I could count if pension members, who were leaving the LGPS for a private sector job, "could carry on paying into the LGPS because it was a much better pension than the DC plan offered by their new employer".

My ears were ringing for weeks due to the phone calls from members (both current and deferred) after the pension freedoms announcement.  That did say that the new rules only applied to DC schemes, but so many people were adamant that they had read that they could just transfer their DB pension benefits straight into their bank accounts.

LHW99

The government is launching a call for evidence on a lifetime provider model to simplify the pensions market by allowing individuals to move towards having one pension pot for life

Hopefully it will also allow individuals not to have just one pension pot for life - there are times when having 2 enables, eg to draw one and leave another invested for eg a spouse to inherit at a later date or perhaps to invest differently in different pots. There may be other good reasons not to put all eggs in one basket  such as an IT meltdown ......

Hoenir

LHW99 said:

The government is launching a call for evidence on a lifetime provider model to simplify the pensions market by allowing individuals to move towards having one pension pot for life

Hopefully it will also allow individuals not to have just one pension pot for life - there are times when having 2 enables, eg to draw one and leave another invested for eg a spouse to inherit at a later date or perhaps to invest differently in different pots. There may be other good reasons not to put all eggs in one basket  such as an IT meltdown ......

Suspect this concept is for the masses. Reduction in the amount of unnecessary admin and therefore cost that's incurred by those changing employers several times over their working lives. Resulting in a better retirement pension. Average DC pension is only around £100k for those approaching retirement currently. 

Grumpy_chap

Hoenir said:

 Average DC pension is only around £100k for those approaching retirement currently. 

What does that mean, though?

I suspect the mass-media would read that and conclude the average individual has around £100k pension provision when approaching retirement.

It may mean that.

It may mean something entirely different.

For starters, it references only DC pension equity so an individual with £100k DC pension provision plus some former DB pension provision is already in a substantially different place.

Secondly, "average DC pension" - if that means different funds accumulated through a succession of employers, then the reference to £100k fund means very little.
As an example, I have one DC pension with a value (when I last looked) around £62 (yes, simply sixty-two pounds sterling).  That fund is frozen, I can't add to it and nor is it worth transferring.  I hope the fund will be one that I can simply encash once I reach the relevant age.  Assuming the £62 is worth more than the cost of the stamp to return the form.

hugheskevi

Grumpy_chap said:

Hoenir said:

 Average DC pension is only around £100k for those approaching retirement currently. 

What does that mean, though?

I suspect the mass-media would read that and conclude the average individual has around £100k pension provision when approaching retirement.

It may mean that.

It may mean something entirely different.

For starters, it references only DC pension equity so an individual with £100k DC pension provision plus some former DB pension provision is already in a substantially different place.

Secondly, "average DC pension" - if that means different funds accumulated through a succession of employers, then the reference to £100k fund means very little.
As an example, I have one DC pension with a value (when I last looked) around £62 (yes, simply sixty-two pounds sterling).  That fund is frozen, I can't add to it and nor is it worth transferring.  I hope the fund will be one that I can simply encash once I reach the relevant age.  Assuming the £62 is worth more than the cost of the stamp to return the form.

Table 6.10 of the Wealth and Assets Survey sets out all pension wealth.

Setting aside issues about the capital valuation of Defined Benefit wealth (which this survey has tended to overvalue, I would argue), a key question is whether the 'average' pension wealth includes or excludes those with zero pension wealth. Across all persons aged 55-64, including those with no pension wealth, the median pension wealth (including both DB and DC) is £102,300. Excluding those with zero pension wealth, and the average is £189,700.

If you just look at males who have pension wealth, the median pension wealth for age 55-64 is £228,200 and for females, it is £152,600.