MPs angry at 'late' pension change

Old woman with hand on caneThe Government displayed a "cavalier attitude" in bringing forward the introduction of a new state pension system by a year, a group of MPs has said.

In last month's Budget, Chancellor George Osborne announced that the single-tier pension will be introduced in 2016, a year earlier than previously planned, meaning employers and pension schemes now have a year less to prepare for the change.

The announcement also came a week before the Work and Pensions Select Committee was due to finish its scrutiny of the proposals, the results of which have now been published.

Its report said it was "clearly not possible for parliamentary committees to conduct effective scrutiny when the Government makes such a significant change to reform proposals a week before the deadline it has itself set for the scrutiny process to be completed".

But the report's findings were still valid, according to Dame Anne Begg MP, chairwoman of the committee.

She said: "I am disappointed that the Government has hampered us in carrying out this task, by giving us very little time to do it, due to the delays in its own timetable for publishing the proposals, and then making a major change to the policy at a very late stage.

"Such a cavalier attitude to the scrutiny role of select committees is unacceptable. Nevertheless, we believe our recommendations are valid and that our findings will assist Parliament when it considers the finalised (Pensions) Bill in the summer."

The single-tier pension, to be introduced in April 2016, will be a single flat rate of £144 a week in today's money. The decision to bring forward the introduction date will place a "significant burden" on employers and pension schemes that operate under the "contracting out" scheme, said the committee.

Under contracting out, employers who offer workplace pension schemes, and the employees who are scheme members, can pay reduced National Insurance contributions in return for giving up entitlement to the additional state pension. This will end with the single-tier pension, meaning the pensions industry and employers who thought they had until April 2017 to prepare for the change now have a year less.

That could pose a "more significant challenge", and the committee called on the Department for Work and Pensions to work closely with employers and the pensions industry to work out how to deal with the change.
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