The main issue with the rules, which will grant new powers to The Pensions Regulator (TPR) to fine and prosecute company bosses that put their workers' gold plated pensions at risk, is that there isn't an expected timeline for the measures to be introduced.
Besides creating new legislation to introduce a criminal offence to punish those found to have committed wilful or grossly reckless behaviour in relation to a pension scheme, the government is also giving the watchdog powers to disqualify company directors, and introducing new punitive fines.
Frank Field, chairman of the Work & Pensions select committee, welcomed the announcement of the new rules.
He said: "But for these measures to be an effective deterrent to the minority of employers wanting to shirk their pension obligations, there has to be a credible threat of them being deployed in full and at speed.
"This has been the problem with existing pension regulation powers, which laid largely dormant while the pension schemes at BHS and Carillion unravelled, with who knows how many more like them still waiting in the wings."
Mr Field argued that there "is a particular concern with the headline measure of criminal responsibility for directors," since similar steps were taken "in the light of the banking crisis but have yet to see any senior figures banged up".
The Work & Pensions select committee suggested new powers for The Pensions Regulator back in 2016, as these would provide what it described as a "nuclear deterrent" against another BHS-style scandal.
Legislation needed to enact the new regime in full will not happen before 2019 to 2020 at the earliest, the committee said.
Other experts agree with this view and were expecting more from the government's paper.
Alastair Meeks, pensions partner at law firm Pinsent Masons, said: "The eye-catching initiative is the introduction of a new criminal offence of wilful or grossly reckless behaviour in relation to a pension scheme.
"However, this is vague, the extent still to be fully established and further consultation is to take place on it."
For David Everett, partner at pensions consultants LCP, the paper leaves much of the present regulatory framework intact, while only being able to set out in outline form what changes are intended to be delivered within an uncertain timeframe.
The government has backed away from its intention of giving the regulator powers to scrutinise takeovers, which was first announced in the Conservative Party manifesto.
Instead, it will investigate if the watchdog's current clearance process captures all appropriate transactions.
Tom Selby, senior analyst at AJ Bell, said: "The document is filled with suggestions of actions that could be taken to protect savers and prevent another BHS or Carillion-type disaster, but anyone hoping the government would come down on firms like a tonne of bricks will likely be disappointed.
"There are reasons for the government's reticence in taking the hammer to firms sponsoring defined benefit schemes. These companies are central to the UK economy, employing hundreds of thousands of people across all manner of sectors."
The government was also expected to address the inflation measure used by defined benefit schemes in the document, but no changes will be made.
Since 2010, the government has dropped the retail price index (RPI) as an official inflation measure, switching to the consumer price index (CPI).
DB schemes can change to the CPI, as long as its own rules don't specifically mention RPI.
DB schemes members’ benefits would decrease by £90bn if their pension schemes were allowed to switch, according to data from the Department for Work & Pensions (DWP).
The government said: "Having carefully considered the financial impacts and the consultation responses, we have concluded that we cannot accept any reduction in the value of member benefits, and are therefore ruling out provision of a power for employers or trustees to change scheme rules so that schemes can apply inflation increases using CPI instead of RPI.”
Ian Browne, pensions expert at Old Mutual Wealth, said that scrapping this proposal was the right move.
He said: “It is, in essence, a retrospective pay cut that cannot be controlled for members of the pension scheme.
"The principle behind DB pensions is that it is deferred pay and it is right that this was not forgotten."
Financial advisers have welcomed the new measures, and aren't expecting to be affected by the plans.
Alistair Cunningham, financial planning director at Wingate Financial Planning, argued that "it has been over 20 years since legislation was introduced to stop employers ‘doing a Maxwell’”.
He said: "In the past few years, we have seen a growing trend of asset stripping companies, with the common outcome that the pension ends up in the [Pension Protection Fund] PPF, I would hope that this change might reduce the number.
"The problem will be where a company cannot continue as a going concern, and 'pre-packed' or similar insolvencies are seen as a way to foist pension liabilities on other schemes via the PPF."
Alan Chan, director and chartered financial planner at London-based IFS Wealth & Pensions, said it is "reassuring to pension members that the government and The Pensions Regulator have teeth and are serious about ensuring employers meet their responsibilities".
He added that the new rules won't "have much of an impact on financial advisers as the funding of the scheme and financial stability of the sponsoring employer are just one of many factors to consider" when assessing a client's pension.
Nick Bamford, chartered financial planner at Informed Choice, is wondering if the new rules "might be another nail in the coffin of DB schemes".
He said: "Decades of government legislation, which set out to provide more protection but at higher cost to the schemes, have probably contributed to the decline of DB schemes in general. The private sector is going to continue to struggle to provide these gold-plated pension benefits."
maria.espadinha@ft.com
