DWP plans approval regime for pension consolidators

DWP plans approval regime for pension consolidators

The Department for Work and Pensions (DWP) will consult on an authorisation regime for organisations seeking to consolidate defined benefit pension funds.

Neil Esslemont, head of industry liaison at The Pensions Regulator (TPR) told a Transparency Taskforce conference today (24 May) this consultation was expected later this year.

In its defined benefit (DB) white paper, the government revealed plans to promote consolidation in the DB pension market, in which two thirds of the 5,600 schemes have funding shortfalls.

Mr Esslemont said the regulator wished to be involved in the creation process of DB consolidation funds, even if it didn't have powers to do so.

"It will be a matter for the consultation if we are going to be authoriser" of these new schemes, he added.

FTAdviser previously reported that consolidation was a top priority for DWP, which has been having discussions with the industry on this topic.

Mr Esslemont said: "We genuinely believe bigger is better."

Following the publication of the DWP's white paper Alan Rubenstein, former chief executive of the Pension Protection Fund, was the first to act by launching the Pension Superfund, which will accept bulk transfers from final salary plans and consolidate them into one occupational pension scheme.

But the new scheme will only take in pension funds that are fully funded.

second consolidator, Clara, is being created and is expected to come to market in the next few months.

TPR will work with the DWP to raise awareness of the benefits of consolidation, Mr Esslemont added.

Regarding the timetable for introducing the changes tabled in the DB white paper, he said the measures which will need legislation were unlikely to come into play before the 2019-2020 parliamentary session.

The proposals which needed to be transposed to law included the regulator’s new powers, such as the new penalty regime, new scheme funding measures and new rules for consolidation, he added.