The Pension Schemes Act 2015 (PSA 2015) received Royal Assent on 3 March 2015, and heralds new changes designed to offer people different levels of confidence in retirement, which go into effect after 6 April 2015.
The reforms provide your employees with the opportunity to save into pension plans known as Defined Ambition (DA), which offer pension-providing employers with a greater sharing of risk whilst providing employees with more pension certainty. DA schemes give employees more certainty of eventual income than existing Defined Contribution (DC) schemes.
One of the biggest changes included in the PSA 2015 is the ability for individuals with a DC pension scheme to access their pensions in full once they reach the normal minimum pension age, which is currently 55.
However, the government has regulations in place to prevent pensions from being overly easy to access—the PSA 2015 implements new protection measures, such as the Pension Wise service, to ensure savers’ pensions stay safe. Pension Wise is a new, free and impartial service to help individuals understand their pension choices and how they work. By speaking on the phone or meeting face-to-face, individuals can learn what they can do with their pension pot, the different types of pensions and how they work, and what is tax-free and what is not. For more information on Pension Wise, visit www.gov.uk/pensionwise.
The PSA 2015 also introduces new, important safeguards that stipulate—depending on the form of savings—whether people need to obtain independent financial advice before transferring their pension.
While the PSA 2015 may add new financial commitments to your business, it will lower financial risks for your employees and provide greater stability for your business. As an employer, neglecting to understand and comply with the new regulations can generate fines, prosecutions and lack of credibility.
For more information about the PSA 2015 and your responsibilities to your employees, visit www.gov.uk/workplace-pensions-employers.