In summary, the ACA evidence says:
• Regulator effectiveness – we do not believe that substantial new powers are needed for the Pensions Regulator as it already has significant powers, some of which it has used only sparingly; increased resources may allow it to intervene in more schemes, potentially at an earlier stage, but will lead to an increased levy payable by pension schemes; and whilst cultural change is clearly underway within the Pensions Regulator, it will take time to achieve. There is also the risk of powers (and fines) being exercised disproportionately in order to prove that the Pensions Regulator is taking a tougher stance, when a more targeted approach might achieve better outcomes.
• Corporate transactions – overall, we think that the package of measures proposed in the White Paper taken together should provide some improvement where corporate transactions have implications for the security of pensions.
• ‘Wilful and grossly reckless behaviour’ – we do not think that the proposed criminal offence under this heading in relation to a pension scheme is likely to have a significant impact on directors of companies sponsoring pension schemes.
• Scheme funding – reducing the complexity and variety exhibited within the DB scheme universe to single metrics is a noble aim, but the unintended consequences will do more harm than good. The Government’s stance in the Green Paper was that DB funding was broadly functioning well, with some exceptions. Therefore, any measures should be focussed on these exceptions, without de-stabilising a system which is by-and-large working well.
• DB consolidation – we believe that consolidation is most likely to happen if schemes simplify their accrued benefits. Increased requirements for minimum standards of scheme governance could also help to drive consolidation. It will be important for an appropriate regulatory regime to be put in place which creates a level playing field for all types of aggregator vehicle and does not undermine the security of members’ benefits.
• Legislative timetable – we do not believe that it would be appropriate to push for a faster legislative timetable than proposed in the White Paper.
A copy of the ACA evidence is available here
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