The long-awaited Pension Bill has been announced in the Queen’s speech today.
We understand that the Bill (which will be a ‘Pension Schemes Bill’) could be published as soon as tomorrow. We are also expecting the Regulator to launch the first part of its consultation on the principles and framework for the new defined benefit (DB) funding Code alongside the Bill.
What will the Bill contain?
We have included below the detail on what is due to be included in the Bill which has been set out in briefing notes accompanying the Queen’s Speech.
The briefing notes confirm that the Bill will include provisions which would:
- introduce new powers for the Pensions Regulator
- enable employers to establish Collective DC schemes (based on the model developed by Royal Mail and its unions), and
- provide a framework to support pensions dashboards.
The briefings notes are silent on DB consolidation. This suggests that we may not see any provisions on the regulation of so-called ‘DB superfunds’ in the Bill when it is published. However, this does not stop legislation on superfunds being introduced as the Bill goes through Parliament.
Will the Bill reach the statute books?
Given the current political climate it is far from guaranteed that the Queen’s speech will be approved by Parliament.
Even if it is, it is uncertain whether there wil be sufficient time for the Bill to progress through Parliament and receive Royal Assent before there is a change of Government and/or a general election. If there is a change of Government, it is likely that the Bill will be delayed to allow time for the new Government to decide upon its approach to the mattters covered by the Bill.
Extract from the Queen’s Speech and associated background briefing
Pension Schemes Bill
“To help people plan for the future, measures will be brought forward to provide simpler oversight of pensions savings. To protect people’s savings for later life, new laws will provide greater powers to tackle irresponsible management of private pension schemes.”
The purpose of the Bill is to:
- Support pension saving in the 21st century, putting protection of people’s pension at its heart.
- Create a legislative framework for the introduction of pensions dashboards to allow people to access their information from most pensions schemes in one place online for the first time.
The main benefits of the Bill would be:
- Providing more options for employers to support their employees, including saving collectively and sharing investment and mortality risk.
- Enhancing the Pensions Regulator’s powers so they can respond earlier when employers do not take their pension responsibilities seriously, including taking tougher action against those who recklessly risk peoples’ pension benefits, building greater trust for saving in pensions.
- Improving advice for savers so they can prepare for retirement with confidence.
The main elements of the Bill are:
- Providing a framework for the establishment, operation and regulation of collective money purchase schemes (commonly known as Collective Defined Contribution pensions).
- Strengthening the Pensions Regulator’s powers and the existing sanctions regime. This will include introducing new criminal offences, with the most serious carrying a maximum sentence of seven years’ imprisonment and a civil penalty of up to £1 million.
- Giving the Regulator powers to obtain the right information about a scheme and its sponsoring employer in a timely manner, ensuring that it is able to gain redress for pension schemes and members when things go wrong.
- Providing a framework to support pensions dashboards, including new powers to compel pension schemes to provide accurate information to consumers. This will include provisions for the Regulators to ensure relevant schemes comply.
- Creating regulations to set out circumstances under which a pension scheme member will have the right to transfer their pension savings to another scheme.
- Improving the defined benefit scheme funding system by requiring a statement from trustees on their funding strategy.
- Amending the legislation for the Pension Protection Fund compensation regime to enable the Fund to continue to apply the compensation regime as intended and amend the definition of administration charges.
Territorial extent and application
- The Bill’s provisions would extend and apply to the whole of the UK.
- Pensions policy is reserved in Scotland and Wales, but devolved to Northern Ireland.