The introduction of a single-tier state pension in the Pensions Bill will be one of the Government's main objectives, the Queen confirmed in her speech today.
The Queen's Speech echoed a previous announcement, which was made in this year's Budget, that the Government will bring forward legislation to create a simpler state pension system.
"My government will bring forward legislation to create a simpler state pension system that encourages saving and provides more help to those who have spent years caring for children," said the Queen in her speech.
From 2016 the concept of a second state pension, which currently allows people to opt-out of some National Insurance contributions and pay more into a private scheme, will end.
The state pension age will also increase to 67 between 2026 and 2028, and future increases will be linked to life expectancy.
The National Association of Pension Funds (NAPF) chief executive Joanne Segars, said: "This much-needed and groundbreaking overhaul has taken another step forward to becoming a reality. We are delighted that, after years of campaigning, this reform is on the to-do list for the coming year. We look forward to engaging with the upcoming debate.
"The state pension needs to be as simple as possible. A clearer, flat-rate system will help people see what they need to save towards their retirement. It will stop people's savings being eroded by means-testing and help them retire with confidence. It also supports the recent auto-enrolment reforms."
The proposal contained in the Queen's Speech was also welcomed by others in the industry.
John Cridland, the Confederation of British Industry (CBI) director-general, said: "It is good news that ministers are going to offset the big increases in employers' NI payments when the state second pension ends. We now need to give additional powers to employers running legacy nationalised industries so they can preserve their schemes.
"We're glad ministers are adopting our proposals to give The Pensions Regulator a new statutory growth objective to ensure each sponsoring employer is financially strong enough to fulfil their liabilities. The best form of protection for employee's benefits, and the economy as a whole, is a solvent and thriving business."
The Queen's Speech also contained some bad news for pension funds. It was announced that the Government would continue to keep interest rates low for businesses.
Although this measure has an economic benefit for businesses, it can have a negative impact on pension funds.
It was also mentioned that the Government would continue to invest in infrastructure to deliver "growth for the economy". This could imply that the Government may continue to attract pension fund investment in infrastructure projects.
First published 08.05.2013
monique_simpson@wilmingto.co.uk
