Pension: DWP confirms how workplace pensions will be affected as the UK leaves the EU
The DWP have confirmed how workplace pensions will be affected going forward (Image: GETTY)Make the most of your money by signing up to our newsletter for FREE nowSUBSCRIBE
We will use your email address only for sending you newsletters. Please see our Privacy Notice for details of your data protection rights.
BREXIT has altered how certain financial assets can be managed and accessed in the UK and abroad and the details km schemes.
By CONNOR COOMBE-WHITLOCKPUBLISHED: 10:42, Sat, Jan 2, 2021UPDATED: 11:58, Sat, Jan 2, 2021https://cdn.images.express.co.uk/viafoura_counter.html?container=express-prod-1378766#amp=1
Martin Lewis gives his advice on state and private pensions
Pension assets are usually built up throughout a person’s working life, with workplace pensions being a key tool for this. These pensions are arranged and set up by an employer and a percentage of an employee’s pay is automatically put into the scheme every month.
- State pension payments are rising in 2021 – but half a million pensioners will miss out
- Universal Credit: DWP minister addresses uplift amid warning for legacy benefit claimants
- Rishi Sunak wants savings to be spent post lockdown – savers urged to cover debts instead
- State pension warning: Your NI contributions may not be qualifying – be aware for 2021
- Attendance Allowance claimants could get extra financial support in addition to payment
In most cases, the employer will also add to the scheme and the government may also provide tax relief on the contributions.
Currently, UK law allows workplace pensions to be paid overseas and the DWP has recently addressed how Brexit will impact these schemes as the UK leaves the EU.https://d-607384059304103634.ampproject.net/2011252111003/frame.html
The DWP detailed on December 31 that the government does not expect the current rules to change as the UK leaves the union.
It advises any concerned retirees to contact their pension providers for further clarity.
READ MORE: State pension: Full details on all the changes arriving in 2021ADVERTISEMENThttps://1a2d8bae9012b79203e42c15624969f7.safeframe.googlesyndication.com/safeframe/1-0-37/html/container.html?n=0
The DWP does note however that if a workplace pension is paid into a UK bank account, the recipient’s bank should contact them if they need to change the way they receive the pension because of Brexit.
Workplace pensions are offered specific protections from certain economic damages but what’s offered is dependent on the type of scheme.
Defined contribution pension schemes
For defined contribution (DC) schemes it should be noted that if the employer involved goes bust, the pensions themselves are usually run by separate pension providers.
As such, the pension pots should be protected.
Pension savers urged to ‘hold their nerve’ in light of a Brexit deal [INSIGHT]
Pension fraud: DWP issues urgent warning on the ‘lowest of the low’ [WARNING]
Martin Lewis advises on the ‘simplest’ pension for the self-employed [EXPERT]https://1a2d8bae9012b79203e42c15624969f7.safeframe.googlesyndication.com/safeframe/1-0-37/html/container.html?n=0
- Martin Lewis breaks down ‘important’ pension tax rules
- Martin Lewis helps Retiree gets ‘astounding’ £82k back payment
If the actual pension provider goes bust, retirees should be able to get compensation from the Financial Services Compensation Scheme (FSCS).
Some of these DC schemes may be run by a trust appointed by the employer, which are known as “trust-based schemes.”
Holders of these schemes should still get their pension if the employer goes out of business but they may not get as much because the scheme’s running costs will be paid by members’ pension pots instead of the employer.
Defined benefit pension schemes
Defined benefit (DB) schemes are rarer to come by in modern workplaces but where they do still exist, the employer will be responsible for making sure there’s enough money in the DB scheme to pay each member their promised amounts.
Brexit is likely to have an impact on finances for many years (Image: EXPRESS)https://tag.imonomy.com/amp/frame/serve/14567721676?format=320×50&rf=https://www.express.co.uk/finance/personalfinance/1378766/pension-dwp-workplace-pensions-brexit#amp=1
Those in DB schemes will usually be protected by the Pension Protection fund if their employer goes bust and cannot pay their pension.
The Pension Protection Fund usually pays:
- 100 percent compensation if a person reached the scheme’s pension age
- 90 percent compensation if a person is below the scheme’s pension age
- Pension warning: Older renters are putting their retirements at risk
- BackTo60 claim women face ‘A Valley of Death’ as life expectancy drops
Currently, the vast majority of UK workers will be impacted by any changes to workplace pension schemes as all employers must provide them under automatic enrolment rules.
Employers must automatically enrol workers into a pension scheme and make contributions so long as all of the following apply:
- the person is officially classed as a worker
- they’re ages between 22 and state pension age
- they earn at least £10,000 per year
- they’re usually based in the UK
- Pension scam ‘red flags’ reach highest level on record
- Pension gender inequality gap reaches £186k – full details
- Pension culture changes urged as people ‘work until they drop’
Most read in Personal Finance
Brexit LIVE: Meddling MEPs wade into UK affairs with coded SNP messages – ‘Never forget!’Emmanuel Macron SAVAGED by Brexiteer as Frexit rumours explodeTory MP fumes as multi-million pound Big Ben restoration delayed AGAIN – ‘Cock-up!’Brexiteer blasts ‘petty’ elites as EU exit hero Farage misses out on New Year’s honourShame on Brussels! Brexiteer exposes EU snub as website has ‘no record’ of UK trade dealRishi Sunak wants savings to be spent post lockdown – savers urged to cover debts insteadPension news: Retirement savings at risk after Brexit deal – ‘Little choice but to sell’Savers urged to build emergency funds, use pension allowances & fill ISAs as lockdown endsBarclaycard customers to see fees rise by 31% this month in ‘painful’ changes for 2021PIP warning: Claimants can be taken to court if changes in circumstance are not reportedState pension warning: Your NI contributions may not be qualifying – be aware for 2021Universal Credit: Payments may be reduced by SEISS grants as a deadline falls this monthAttendance Allowance claimants could get extra financial support in addition to paymentUniversal Credit: DWP minister addresses uplift amid warning for legacy benefit claimantsMoney saving: How Britons can ‘prosper’ and become debt free in 2021Premium Bonds: NS&I explains how customers can keep their details safe from new scams
Sunday, 3rd January 2021
See today’s front and back pages, download the newspaper, order back issues and use the historic Daily Express newspaper archive.
CONNECT WITH US
IPSO RegulatedCopyright ©2021 Express Newspapers. “Daily Express” is a registered trademark. All rights reserved.