My Lords, the regulations we are debating today make consequential modifications to the Pension Schemes Act 1993 and to the Finance Act 2004, to make sure that the major public pension schemes created under the Public Service Pensions Act 2013 work as intended.
They make some small and technical modifications to the law governing the new teachers’, NHS, civil service, police, firefighters’ and Armed Forces pension schemes. The consequential modifications relating to the Judicial Pension Scheme are being debated as part of their main regulations.
It might be helpful if I set out some of the context and background to the wider reforms to public service pension schemes. People are living longer and the cost
of providing public service pensions is increasing. Following recommendations made by the noble Lord, Lord Hutton of Furness, and adopted by this Government, new pension schemes are being established under the Public Service Pensions Act 2013 for civil servants, the judiciary, local government workers, teachers, health service workers, fire and rescue workers, members of police forces and the Armed Forces.
These reforms were needed to balance the legitimate concerns of taxpayers about the cost of public service pensions with the need to ensure decent levels of retirement income for millions of people who have devoted their working lives in the service of the public. I am pleased to say that these reforms received cross-party support when they were debated in your Lordships’ House.
The design of the new schemes has now been settled, and the schemes will take effect from 1 April this year. The statutory instruments before us today are simply the means of ensuring that the scheme designs work properly within the wider framework of pensions and tax law. They will make sure that the members of these schemes get the pensions that they expect and that they do not lose out as a result of any glitches between the scheme design and the wider pensions’ law.
Two sets of modifications are being made to the Pension Schemes Act 1993, the first of which is needed to ensure that members moving from their existing schemes to the new schemes are not inappropriately treated as deferred members of their existing schemes. The purpose is to ensure a seamless transition between the old and new schemes.
The modifications are, first, to ensure that the benefits they have accrued in their existing schemes are not revalued as if they were deferred members. Secondly, that their right to a cash equivalent transfer value, a refund of contributions or to a cash transfer sum applies only when they leave the new scheme. Thirdly, that anti-franking provisions do not apply as if they were deferred members on 1 April 2015. The modifications we are making mean that for these purposes such individuals do not cease to be active members of their existing scheme until they also leave their new scheme.
5.22 pm