2018 commenced with the collapse of Carillion, closely followed by the UK arm of Toys R Us, resulting in around 31,000 workers losing their job, and with it, their full promised pensions. Although not the best start to the year, these two high profile cases hopefully spurred employers to ensure their defined benefit (DB) pension schemes are better funded. Reassuringly, the Department for Work and Pension’s (DWP’s) White Paper published in March actually showed that the majority of the 5,600 DB occupational schemes are well-managed.
House of Fraser had a troubled year and in August was bought for £90million by Sports Direct mogul, Mike Ashley, just hours after it went into administration. Luckily the department store’s pension scheme was relatively well funded, so employees should receive higher benefits than if the scheme entered the PPF.
The government’s 2018 Automatic Enrolment (AE) evaluation report revealed that opt-outs for the AE workplace pension scheme remained consistent throughout 2018 – despite April’s contribution increase to a combined 5%. The next rise takes place this April, increasing to a combined 8% – of which employees will pay 5%.
In September the Office for National Statistics (ONS) reported that life expectancy in the UK has ground to a halt and seen no increase for the first time since records began. Despite this, the government is progressing with plans to increase the State Pension age. In November, the women’s State Pension age controversially rose to 65, bringing them in line with men for the first time. The age at which both genders can collect their pensions will further increase to 66 by October 2020 and 67 in 2026, with a possible increase to 68 by 2039.
Looking ahead to 2019, we’re preparing for the introduction of the first pensions dashboard which will allow everyone to access and manage all their private pension arrangements in one place along with their State Pension, and the Pensions Regulator looks set to be given more powers from this year allowing it to be more forceful in ensuring that employers fund their DB schemes adequately.
Obviously, Brexit is dominating the country at the moment, but pension-wise there are significant positive changes afoot and I look forward to seeing what the year brings.