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New legislation covers the bridging pensions gap

The government has published regulations which set out how bridging pensions are to apply before and after the end of contracting out on 5 April 2016 - the Registered Pension Schemes (Bridging Pensions) and Appointed Day Regulations 2016.

The new regulations work with section 20 of the Finance Act 2016 to align current bridging pensions rules with the changes resulting from the introduction of the single tier state pension from 6 April 2016. They set out when the rate of the scheme pension may be reduced and allow bridging pensions to continue to be paid without affecting the nature of the ongoing instalments of scheme pension as authorised payments for tax purposes. In doing this, they distinguish between those who reached pensionable age on or before 5 April 2016 and those who reached state pensionable age on or after 6 April 2016, with different rules for each.

Although these new regulations are highly technical, the important point to bear in mind is that bridging pensions will still be permitted broadly as before. The new regulations apply from 8 November 2016 but apply to bridging pensions in payment from 6 April 2016 onward.

If you would like further advice in relation to the technical application of the new regulations or any further legal analysis, please contact Penny Cogher or your usual member of the team.

Key Contact

Penny Cogher