The Pension Regulator’s (TPR’s) Chief Executive, Charles Counsell, welcomed the Pensions Schemes Bill receiving its Royal Assent. He said: “The Pension Schemes Act 2021 provides a strong package of measures to further protect UK pension savers. We are extremely pleased to see it become law and have worked closely with the Department for Work and Pensions to develop effective proposals that will make a real difference to savers.
“Through the new Act, we will build on our clear, quick and tough approach to drive better standards across the pension schemes we regulate and ensure savers are treated fairly by employers.
“The Act gives us new powers to act against unscrupulous employers and enhances our ability to gather information more efficiently, and to scrutinise how defined benefit pension schemes are funded and the actions that affect them. We will be clear in our expectations when talking to trustees, employers and others, and quick to take effective action where we have concerns. Trustees will be expected to demonstrate how their funding approach is prudent, appropriate and sustainable.
“We will continue to work closely with the industry and other stakeholders to produce the necessary codes and guidance to ensure the measures are introduced in an effective way. We are a risk-based and proportionate regulator and this measured approach will continue. Our work is driven and directed by the pursuit of our statutory objectives and we use our powers where appropriate and reasonable to do so.
“The Act highlights that pension scheme trustees should be considering the effects of climate change, and we can expect regulations requiring them to engage more fully with the risks and opportunities arising from the response to this global emergency. We too are stepping up to meet this challenge and will be launching our own climate strategy during 2021.”
Matthew Arends, partner and head of UK Retirement Policy for Aon, said: “This has been a lengthy but very worthwhile process. It’s one in which Aon has been very active from the start, so we take particular pleasure in today’s news.
“This legislation brings CDC schemes into reality and with the increasing decline in the private sector of defined benefit schemes, it offers the possibility for DC savers to achieve an income for life from their DC savings in both an efficient way and without having to make complex investment decisions.”
Matthew Arends continued: “Sitting alongside familiar DB and DC benefit designs, CDC can now offer something different and welcome, so we are approaching an exciting time.
“This new legislation opens up the opportunity to enable single employer CDC plans. But it shouldn’t stop there – the path should now be open for Government and the Department for Work & Pensions to move ahead at pace with the second phase of enabling legislation. This would provide wider-reaching options, making CDC accessible in a variety of ways – potentially including CDC master trusts, decumulation-only CDC platforms, and industry-wide or multi-employer CDC plans.”
Laura McLaren, Partner, Hymans Robertson says: “It is great to see the Pensions Schemes Bill finally complete its long journey through parliament and receive Royal Assent. Beset by delays caused by Brexit and the ongoing impact of the COVID-19 pandemic, to many this will feel it has been a long time coming. However, although the new Pension Schemes Act lays the foundations for changes to many areas of pensions legislation, it is really just the first step. Whilst the Act establishes a lot of important primary legislation, much of the underlying detail is left to secondary regulations and guidance that will now need to be drafted, consulted on and implemented over the coming months.
“The Regulator has already announced a second consultation for later this year on the new DB funding code of practice, with the new rules almost certainly not coming into operation until into 2022. Engagement and consultation is also expected on the provisions around corporate activity and how the Regulator will exercise its expanded arsenal of powers, with these expected to be in play by autumn of this year.
“As a more complete picture of what compliance will look like across different areas begins to emerge, keeping on top of the potential implications is likely to feature heavily within schemes’ work plans. The devil will be in the detail of the regulations and guidance to come over the rest of 2021.”
Paul Waters, Partner, Hymans Robertson, says: “Now that the Pensions Bill has finally become law, it should be a catalyst for the development of the Dashboard - further adding to the progression in 2020. The framework for delivery of this challenging initiative gives confidence in negotiating the tricky steps ahead. Yet, this will be a massive task. Innovation in the pensions space has significantly lagged innovation in the broader savings and finance space and the dashboard is a good example. Pensions Dashboard should be enabling the same level of innovation in the retirement space as Open Banking has for consumers. This has created a whole industry of Fintechs that can use its framework to solve debt and savings challenges to deliver better outcomes for consumers.
“So far, however, progress on the Pensions Dashboard has been way too slow and we are unlikely to be anywhere near the Open Banking position by the end of this year. There’s much talk about the advice gap, and the complexity for individuals is only increasing with the demise of DB and increase in job mobility. Gathering the data required is the most expensive part of advice, but it’s “busy work”. Once the data standards work is complete, we would expect to see a definition of secured APIs for accessing data. That’s essential to drive consumer experience innovation that harnesses the availability of dashboard data.
“The Dashboard can, and should, make a disruptive change. But despite the progress made through 2020, we are still measuring the dashboard programme through internal industry activity and milestones. We need to move quickly to a place where we are measuring progress by the tangible benefits being delivered to the millions of UK savers who need help in planning for their retirement. It needs to move even faster, and with the Pensions Bill in place, it would be great to see industry commitment to make that happen.”
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