It is the final piece of legislation bringing into force the upcoming pension flexibilities on 6 April 2015.
The passing of the Pension Schemes Act 2015 aims to transform the retirement prospects for millions of younger workers, with new rules providing greater clarity for pension savers, as well as protection for those taking advantage of the new pension freedoms after 6 April 2015.
The legislation passed today will create the opportunity for workers to save into plans – known as Defined Ambition – which will offer them a promise about some of the benefits they will receive.
Currently, a growing majority of workers who have a pension pay into Defined Contribution schemes which, while offering many advantages, do not give any guarantees of eventual income.
The Pension Schemes Act will also enable new collective pensions to operate in the UK. Schemes offering collective benefits will be able to pool risks between the members and this can provide greater stability and already operate successfully in other European countries.
The act also provides further protection measures for pension savers taking advantage of new flexibilities to access their pension pots from this April, including important new legislation on the new guidance service, Pension Wise.
These reforms come into effect shortly before the new pension freedoms which are due to take effect in April.
Minister for Pensions Steve Webb said:
"The passing of this act marks the culmination of a 5-year pensions revolution under this coalition government.
"While for years successive governments simply watched the slow decline of the final salary scheme, we have responded by giving firms new ways of providing their staff with secure pensions.
"There is a real appetite from employers to offer high-quality pensions for their staff and the new Defined Ambition pensions made possible by this act will enable a new generation of better, fairer schemes.
"The act also protects the new pension freedoms and flexibilities, so people have control of their pension pots, and know it is a criminal offence for scammers to pretend to offer official Pension Wise guidance."
Economic Secretary to the Treasury Andrea Leadsom said:
"Our radical pension reforms are about giving people more choice when they retire.
"The government believes that people who have worked hard and saved all their lives should have the freedom to decide how to use their savings and the guidance to help them make good decisions.
"Pension Wise empowers and educates people so they can make their own, informed choices about their pension and the legal framework for Pension Wise, including the rigorous standards set by the regulator for the service, comes into force today.
"Today a new criminal offence comes into effect which means that people passing themselves off as providing the official Pension Wise service will face a fine or prison. This will help ensure Pension Wise is a brand and service that people trust and to protect people from potential scammers."
