Following on from my earlier post re the Autumn Statement today, a couple of other nuggets of information to those interested in the impact on the employee benefits landscape:
1) Tax Free Childcare:
Although no new announcements on this area appear to have been made today, we do at least have a progress update from Mr Osborne.
The Autumn Statement supporting document states:
“A response to the consultation will be published in early 2014.â€
I have not yet checked back, but I think this is already a slipping of the timetable here, but it’s good to know that some further information will be released on this one in the near future. I will of course update you on this blog when this is forthcoming.
2) State Pension Age (and what this means for employee benefits):
Although I have welded two parts of the Autumn statement together, the below paragraph will give you a flavour of the dramatic changes that are taking place with regard to State Pension Age (which for so long remained static despite longevity increasing):
“The government has already taken action to control pension expenditure over the medium term by bringing forward the rise in the State Pension age to 66 from 2026 to 2020, and introducing legislation to bring forward the rise to 67 from 2036 to 2028…. This principle implies that the increase in the State Pension age to 68 is likely to come forward from the current date of 2046 to the mid 2030s, and that the State Pension age is likely to increase further to 69 by the late 2040s.â€
So it’s clear that we will all be working longer and longer as time goes on. This has an impact on employee benefits also.
Firstly, many company supported pension schemes remain targeted for a retirement age of 65. This was often driven by the knowledge that State pension would also come into play at that time to underpin the company pension, and that the two would then provide a suitable level of retirement income. It’s therefore important that employers and employees begin to understand that this connection is now in flux, and perhaps employer’s pension offerings should begin to reflect this change.
There is also an impact away from pensions though. Since the abolition of the Default Retirement Age, employers have no longer been able to forcibly retire an employee on age grounds alone. Yet employers can continue to use an exemption to cease some employee benefits (for instance Group Life or Group Income Protection) from the previous (and otherwise redundant) State Pension Age (SPA).
Many older employees, even those that want to retire, may be unable to financially afford to do so until State Pension kicks in. And it’s therefore likely that as SPA increases, so too will the number of employees who are beyond the former State Pension Age, below the new State Pension Age, and despite working on, now find that some of their core employee benefits have been taken away from them. This is clearly a situation to avoid, so if you are an employer who has restricted benefits to the former State Pension Age, this is something you may want to look at again.
More info on the Autumn Statement will follow as it becomes known.
Best regards
Steve
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