• GMP conversion Bill passes Committee stage
• Auto-enrolment parameters for 2022/23 settled
• Second State Pension Age review – call for evidence launched

GMP conversion Bill passes Committee stage

The Private Member’s Bill that seeks to resolve a number of difficulties with the DWP’s GMP conversion law has now passed Committee stage in the House of Commons where, once more, it attracted the full support of pensions minister Guy Opperman MP.

Significantly, given that the Bill takes enabling powers for details to be set out in regulations in relation to the employer consent issue and the nature of contingent survivor pensions post conversion, Mr Opperman promised that “there will be a full consultation among industry” and that the regulations to follow will be debated in Parliament.

The Bill now moves on to Report stage and Third Reading, scheduled for 25 February 2022, after which it will be taken to the Lords.

Comment

Good progress is being made in what is now in effect a Government Bill.  With a fair wind one would hope that all stages will be completed by the summer recess enabling the DWP to focus on the regulations later this year.

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Auto-enrolment parameters for 2022/23 settled

The Government has published analysis supporting its review of the earnings trigger and qualifying earnings band to be used for auto-enrolment purposes for 2022/23.  The earnings trigger above which individuals must be auto-enrolled will continue to remain frozen (as it has been since 2014/15), and the band of earnings on which minimum contributions are based will continue to be aligned to the Lower and Upper Earnings Limits for national insurance purposes.  Therefore for 2022/23:

• The automatic enrolment earnings trigger will be maintained at £10,000 pa
• The lower limit of the qualifying earnings band will remain at £6,240 pa
• The upper limit of the qualifying earnings band will remain at £50,270 pa

The analysis states that freezing the earnings trigger will bring an additional 17,000 savers into pension savings compared to increasing it in line with average wage growth.

The results of this review have been announced in Parliament by Guy Opperman, with a statement that “The Government is considering what more can be done to enable people to have greater financial security in retirement”.

Comment

Whilst the continued freeze to the earnings trigger is bringing more people into scope for auto-enrolment, many are still missing out, such as those with multiple part-time jobs with each delivering earnings below £10,000 pa.  We also continue to wait to hear when the Government will start to implement the results of the 2017 auto-enrolment review (see Pensions Bulletin 2022/04).

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Second State Pension Age review – call for evidence launched

The independent review of the State Pension Age, being led by Baroness Neville-Rolfe (see Pensions Bulletin 2021/52) has issued its call for evidence document and notes that it “would like to hear from as wide a range of people as possible”.

Section 3 of the call for evidence sets out the questions the review is seeking answers to and these include questions about intergenerational fairness, how the nature of work is changing, sustainability and affordability about the cost of the State Pension, and metrics for setting the State Pension Age.

The call for evidence also sets out certain background information including trends in demographics, labour markets and State Pension expenditure.

The deadline for responses is 25 April 2022.

Comment

The cohort life expectancy set out in the call for evidence is of particular note as the latest 2020-based projections show a significant fall in life expectancy compared with their 2014-based equivalent, on which the previous review was based.  Life expectancy is still expected to improve over the coming years, but not to the same extent as predicted in previous years.

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