Nigel Peaple, Director of Policy at the Pensions and Lifetime Savings Association (PLSA) comments on the republished Pension Schemes Bill: “With the reintroduction of the Pension Schemes Bill as one of its first acts following the election, we are pleased the Government is prioritising the £2 trillion pension sector. Workplace pensions provide an essential retirement income for millions of people so it is vitally important schemes have legislative clarity.
“The Bill paves the way for the creation of the Pensions Dashboard, strengthens the powers of the Pensions Regulator, enables a stronger funding regime for DB pension schemes and allows the creation of Collective Defined Contribution pensions. These measures will help more people have a better income in retirement.
“It is disappointing that this Bill has not yet scheduled the planned removal of the lower earnings limit to automatic enrolment contributions meaning millions missing out on extra saving with employer support and tax relief. The Government committed to do this by the mid-2020s so we hope that they will take action on this in the near future.
“Also missing is much-needed action to allow for the option for Defined Benefit pensions to consolidate into superfunds to protect member benefits and create an incentive and achievable goal for employers to accelerate funding into schemes. We know the Minister for Pensions has given his public support to this initiative so we can only conclude it is being delayed for other reasons.
“We welcome measures to prevent scheme sponsors from deliberately evading their responsibilities but current drafting is too loose and risks applying far more widely than intended.
“We hope the new majority Government would seek to resolve these issues by amendment or otherwise miss the opportunity to help millions of savers.”
Commenting Wayne Segers, Head of Pensions Solutions at XPS said: “As we saw with the 2019 Bill, the powers and new penalties are wider ranging than may have been expected from consultations. Defences exist for trustees and employers and before companies embark on any material action it will be important to consider, mitigate and record the impact on the pension scheme.”
“The Bill also outlines expected changes to pension funding and strategic objectives for defined benefit schemes. The expected, imminent consultation from the Regulator on its new funding code principles will be essential to fully appreciate the impact of these changes. For these changes to be effective, however, it will be important that the Regulation can enforce any new requirements in a timely way. The Bill appears to outline that the process to do so will be similar to existing enforcement actions which can be drawn out and end up stuck in legal appeals processes.”
As for the 2019 Bill, the 2020 Bill allows for the creation of Collective Money Purchase Benefits, the Pensions Dashboard, greater protections for transfers out of DB schemes and tidying up areas of compensation by the pension protection Fund and definition of charges in Defined Contribution schemes. The one area that is still missing is anything on regulating to allow for DB Superfunds (stand-alone consolidators of pension schemes).
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