UK government due to present long-awaited pensions legislation
The UK government is due to present long-awaited pensions legislation covering measures to advance the pension dashboard, strengthen the regulator, and enable collective defined contribution (CDC) pension provision, according to the Queen’s Speech today.
The contents of the bill have been well-trailed, with some elements having been subject to consultation earlier this year or in 2018, and the industry has welcomed announcement of the bill in the Queen’s Speech.
Matthew Arends, head of UK retirement policy at Aon, said: “Given the distractions elsewhere, it’s good news that the government is pressing ahead with key elements of pension innovation in a pensions schemes bill.”
For Claire Carey, partner at Sackers, the “centrepiece” will be the bolstering of TPR’s powers. The pensions bill is to introduce new criminal offences, including a civil penalty of up to £1m (€1.15m).
Charles Counsell, TPR’s chief executive, said the pensions bill would give it “the power to set and enforce clearer scheme funding standards in defined benefit (DB) pension schemes while also providing early warning of potential problems”.
TPR is expected to publish a consultation on a new code of practice for DB scheme funding after the pension scheme bill itself is published.
On CDC, Aon’s Arends said the new legislation is expected to usher in single-employer schemes, but that the government should “press on with phase-two, enabling multi-employer and commercial CDC plans”.
In early 2018 Royal Mail and the Communications Workers’ Union selected CDC as the best option for settling a long-running dispute over pay and conditions, but the model they came up with is not permitted under current rules.
According to Jamie Jenkins, head of global savings policy at Standard Life, the most “progressive element” of the bill will be the legislation to pave the way for pensions dashboards. These are intended to give people access to all their pension information in a single place online.
The promised pensions bill is to include new powers to compel pension schemes to provide accurate information to savers.
Industry commentators noted that the Queen’s Speech did not mention other key pension areas, namely auto-enrolment and regulation for commercial DB consolidation vehicles.
Steve Webb, director of policy at Royal London and a former pensions minister, said measures to expand auto-enrolment and regulate DB ’superfunds’ were left out because of splits in government, with the Treasury blocking the Department for Work and Pensions (DWP).
“It is one of the biggest failings of UK pension policy that the department with lead responsibility for pensions can be thwarted in bringing forward sensible reforms by an over-mighty Treasury which has no vision for pensions,” he said.
DB superfund legislation could still come, however.
Ian Neale, director at Aries Insight, said: “From past experience it is entirely possible that something could be added via new clauses tabled by the government during the bill’s passage through parliament.”
A DWP spokesperson told IPE: “The historical success of auto-enrolment has been built on […] consensus across parliament and private industry and we are still committed to implementing the findings of the auto-enrolment review but we are continuing to work on how best to do that”.
On the commercial DB consolidators, he said this was “a very complicated area of regulatory policy”.
“We are committed to transforming the pension industry and trying to get the best possible result for savers, and we are still working with various stakeholders, regulatory bodies and arms of government to make sure we push through that regulation,” he added.
The Treasury did not respond to a request for comment by the time of publication.
Standard Life’s Jenkins said that although the pensions bill will struggle to get the necessary time for debate given Brexit and the prospect of a general election, this is one of the government’s less contentious bills “with, I suspect, broad cross-party support”.