Defined BenefitMar 8 2018

Industry expects pension paper with Spring Statement

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Industry expects pension paper with Spring Statement

Several pension industry experts are expecting the government’s defined benefit (DB) white paper to be published next week, alongside the Spring Statement on Tuesday (13 March).

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.

The Department of Work & Pensions (DWP) has been working for several months on this document, which was first expected to be published in 2017, and then delayed to February 2018.

Pensions minister Guy Opperman said in parliament that the paper in now expected in the spring.

Sir Steve Webb, director of policy at Royal London and former pensions minister, told FTAdviser that he is expecting the document to come out next week and set out “the government’s response to a number of high profile problems such as BHS, British Steel, Carillion and others”.

However, Sir Steve is not expecting big changes to the DB market, since “ministers have already signalled that they don’t believe the system is fundamentally broken”. 

He said: “I therefore expect one or two headline-grabbing measures, such as a new criminal offence of wilfully failing to fund a pension scheme properly, but relatively little else. 

“In addition, the government is unlikely to be able to pass any new laws any time soon, so real change on the ground in terms of the legal framework could be several years away.

“In the interim, the most we are likely to see is The Pensions Regulator being a bit more proactive when it comes to companies who are perhaps emphasising dividends at the expense of deficits.”

Esther McVey, the new secretary of state for work and pensions, confirmed last month that there will be changes to the watchdog’s powers, allowing it to be more proactive in its investigations.

Rachel Vahey, product technical manager at Nucleus, also believes that it is possible for the paper to be published with the Statement, since Chancellor of the Exchequer Philip Hammond has promised no tax changes for next week.

She said: “We expect the Spring Statement to be a low-key event. The Treasury has already confirmed that there will be no new policy announcements.”

Ms Vahey is expecting, however, several documents to be published alongside the Statement, “and these may be able to shed some light on the state of play for UK pensions”.

She said: “For example, we may receive information on pension freedom statistics showing the actual and forecast revenue intake for the Treasury.”

Gabrielle Holgate, partner and pensions expert at law firm Stevens & Bolton, shares the opinion that the chancellor may use the Statement to highlight the government’s upcoming white paper.

However, in the pensions arena, she is expecting new rules on collective defined contribution scheme, after Royal Mail’s desire to set up such a plan for its workers.

She said: “An easy win for the government would be to enact legislative provisions in the Pension Schemes Act 2015.”

Other pension specialists, however, doubt that the paper will come out as soon as next week.

Paul Murphy, head of strategy and business development at pension provider TPT Retirement Solutions, told FTAdviser that he expects the document to be published in May, since it will build up on a series of legislation expected to come into force in April.

One of this documents refers to the new rules on contracted-out bulk transfers without member consent, which the Department for Work & Pensions (DWP) published a consultation response to last month.

Experts are also hoping that other pension topics are brought up in next week’s Statement.

Steven Cameron, pensions director at Aegon, said: “While Brexit will continue to dominate government time and thinking power for at least another year, the Statement presents an opportunity to touch on other longer term Government policies.

While it may be wishful thinking, it would be good to get some insight into the direction of travel of social care funding which will ideally be considered alongside pensions.

“We’re also due government proposals on how to encourage greater pension provision for the self-employed. These are issues that will remain with us after Brexit is done and dusted.”

maria.espadinha@ft.com