UK roundup: DWP Select Committee, Pensions Bill, LCP
A cross-party group of MPs has raised concerns with the Department for Work & Pensions (DWP) about its momentum in bringing through new risk-sharing legislation.
The UK government launched a consultation on bringing in new risk-sharing pensions, placed in between traditional defined benefit (DB) and defined contribution (DC), in November 2013.
But it has yet to publish its planned legislation.
The risk-sharing – named ‘defined ambition’ – is set to look at reduced DB options and enhanced DC options, as well as Collective DC (CDC).
However, a report from a cross-party working bench accused the government of losing momentum over the proposals.
It also raised concerns over delays with the government’s planned cap on charges for those being auto-enrolled into DC schemes, after it was postponed by at least a year until April 2015.
The DWP responded and said it was committed to bringing in a charge cap within this Parliament, which ends in May 2015.
It also said it would publish its defined ambition plans shortly.
In other news, the Pensions Bill, which is being debated for the final time before being enshrined into law, has seen opposition amendments shot down by the government.
In a debate yesterday evening, the Liberal Democrat pensions minister Steve Webb called for the rejection of certain Labour amendments on charge disclosure and employment law.
The amendments referred to changes to the Bill regarding contributions to National Insurance for low-paid workers, and for the government, instead of the financial regulator, to force pension providers to disclose charges to members.
Webb said the amendment to employment law did not fit in with what the average worker experienced over their working lives.
He also said the amendment to the government’s own proposition, calling for government action over the financial regulator, did not fit in with the current system.
The Bill passed, rejecting two amendments, and will now move forward to Royal Ascent.
Lastly, research from consultancy LCP showed 2013 to be a record-breaking year for bulk annuity deals and longevity swaps.
The market showed healthy growth due to favourable economic conditions, with written bulk annuity business up by 69% from 2012 alone.
There was more than £16bn (€19bn) of liabilities hedged with insurance companies during the year, with £7.4bn in bulk annuities and £8.9bn in longevity swaps.
The bulk annuity market was dominated by Pension Insurance Corporation (PIC), which accounted for 47% of all business.
Its nearest rival, Rothesay Life, wrote 22%.
The two, together with Legal & General, accounted for more than 90% of transactions in the year.
Emma Watkins, partner at LCP, said average transaction size increased by more than 30% in 2013, and predicted that 2014 bulk annuity deals could exceed £10bn.
“We have every reason to expect that 2014 volumes will continue the positive momentum from last year,” she said.