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Many of the changes announced were first proposed in the Mansion House speech this summer, or in the spring Budget.
Surpluses
Consolidation
Lifetime provider
Private equity
Master Trusts
DC arrangements
Employers
Trustees
Lifetime Allowance (LTA)
The plans for further consolidation of DC and certain DB schemes will aim to bring benefits of scale and the government hopes a more diversified investment portfolio including more private equity.
Plans for a DC 'pot for life' aims to simplify members’ ability to keep their pension in one place. Administratively there would be an increased burden for employers.
The tax change in relation to use of surpluses and the abolishment of the LTA will be of immediate relevance to some Trustees and employers.
Employers and Trustees should consider these planned reforms and changes, including how they may impact their pension scheme arrangements.
Back to top: Explore all Autumn Statement measures announced
Author: Dinesh Jangra, Partner, Workforce Advisory
The headline, of course, is the reduction from 12% to 10% in the rate of employee class 1 National Insurance Contributions (NICs). The simplicity of the pensions 'pot for life' sounds attractive to employees but employers will be keen to feed into the consultation on this to check that associated administrative complexity is kept in check.
Employee NIC changes will put more money in employees’ pockets from January 2024 and therefore help employers manage related inflationary pressures on their pay bill. Payroll managers will be keen to understand how the associated systems changes will be ready for the January 2024 payroll effective date. Employers are usually set-up to pay into a single, or small number of pensions providers, so a move to 'pension pot for life' could add workload and complexity for payroll and benefits departments. The increases in National Living Wage increase the risks of non-compliance in this technical area. Employers will want to test their own compliance and controls.
Employees will generally welcome the measures announced. More money in pockets and simplicity are of course attractive. Employers will need to manage the short and longer-term transitions and keep an eye on how they add to administrative complexity and risk. Employers in certain industries should review the impact of the National Living Wage on their business.
Back to top: Explore all Autumn Statement measures announced
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