Pensions  

DWP won't change pensions rules until 2020

DWP won't change pensions rules until 2020

There will be no new legislation on pensions in the next two years, revealed Charlotte Clark, director of private pensions and stewardship at the Department for Work & Pensions (DWP).

Speaking at the Pensions and Lifetime Savings Association (PLSA) conference in Manchester, Ms Clark said that “the chances of a pensions bill before 2020 look very slim”.

She said: “One of the great advantages at the moment of being in government is that you can't legislate; in some areas that causes a great problem, in other areas that is a really good advantage.”

Ms Clark is in charge of the DWP team preparing a white paper on defined benefit (DB) schemes, which she expects to be published by the end of February 2018.

The paper, which follows a consultation launched in February into what needed to be done to ensure confidence and secure the future of these schemes, will consider the need to adapt the regulatory regime.

Even though Ms Clark recognises that this is a sector with “some issues”, which has been seen with the cases of BHS and Tata Steel DB schemes, she said that it is not “a sector in crisis”.

She said: “There are things we can try to do to improve the security (and) the sustainability of the sector as we move into rundown.”

One of the areas of focus of the white paper is consolidation, which is “an amazingly complex plan of approach,” Ms Clark said.

The white paper won’t have an answer to this problem, but it will provide a direction of travel, she added.

She said: “I actually think that we have time to think through the different consolidation models and the pros and cons of different ways of consolidation, and to understand what would require to start going down that route, and if is the right route for us.”

Tom McPhail, head of policy at Hargreaves Lansdown, agreed with Ms Clark's views on pensions legislation.

He said: ”It is going to be a challenge for the government to get any pensions legislation through the House of Commons.

“It's always contentious, they have a very narrow majority and they are very preoccupied with Brexit.”

Mr McPhail argued that the issues being discussed “are important, but not necessarily urgent”.

He said: ”It would perhaps be unrealistic to expect the government to legislate on the short-term.

“In the meantime, encouraging voluntary consolidation, looking for ways to encourage schemes to merge resources when possible, those are the easy wins on the short-term.

“We shouldn't look to politicians to deliver game changing solutions in the course of this parliament.”

According to Mr McPhail, “consolidation will drive efficiency, and that potentially drives better value for members”.

He said: “Whatever happens, there is not enough money in the system to meet all the promises that have been made.”

maria.espadinha@ft.com