Queen’s Speech outlines plans affecting benefits

The Queen has outlined the Conservative/Liberal Democrat government’s plans to reassess the changes to national insurance contributions (NICs), phase out the default retirement age, review the intended increase in the State pension age, and introduce flexible working for all employees.

National Insurance Contribution bill

The National Insurance Contribution bill will overturn the former Labour government’s planned increase for employers. Instead, the Queen supports the coalition government’s plan to reassess these increases so employers will not be subject to any changes, staying at 12.8%, while employees see national insurance rise from 11% to 12% in April 2011.

John Cridland, deputy director-general of the Confederation of British Industry, said: “NICs are a tax on jobs and reducing next year’s increase to the employers’ contribution is the right move at a time when we want to encourage businesses to create jobs. This is good news for firms of all sizes.”

Default Retirement Age

The Queen also committed to phasing out the default retirement age. John Lawson, head of pensions policy at Standard Life, said: “There will be some tough discussions and negotiations with employers over that.”

Pensions and Savings bill

Under current legislation, the State pension age is due to increase to 66 years between 2024 and 2026 followed by two further increases at 10-year intervals. However, a review to the Pensions and Savings bill will re-examine this timetable and make recommendations.

John Ball, head of defined benefit consulting at Towers Watson, said: “The new government has only limited its freedom of manoeuvre for people in their fifties and sixties.

“While attention has focused on how soon the State pension age will rise to 66, the bigger question is what happens afterwards. Rather than rising to 68 by 2046, we could see it going up further and faster.”

Flexible working and equal pay

The Queen also said the government will remove barriers to flexible working for all employees and promote equal pay. The coalition document states: “We will extend the right to request flexible working to all employees, consulting with business on how to do so.

“We will promote equal pay and take a range of measures to end discrimination in the workplace.”

Welfare Reform bill

Additional impacts to employers and employees include the Welfare Reform bill, which aims to make the benefits system less complex, improve work incentives and reduce unnecessary administration of benefits.

Katharine Moxham, spokesperson for industry body Group Risk Development (Grid), said: “The Queen’s Speech confirms the government’s commitment to advancing welfare reform measures initiated by the previous administration.

“This will put increasing onus on employers to assess an employee’s level of incapacity and to manage a staged return to work programme. Under these circumstances, effective vocational rehabilitation, early intervention and case management services are more important than ever before.”

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