Guy Opperman, minister for pensions and financial inclusion, is expecting the new legislation on defined benefit (DB) pension schemes will come into law in 2019.
In an interview with FTAdviser's sister publication Pensions Expert, Mr Opperman said that he hopes the new rules “will be part of the Queen speech next year”.
New pension legislation is usually discussed in parliament after being announced in the Queen’s speech in June.
However, this year’s speech was cancelled to give parliament more time to work on the details of Brexit.
In its defined benefit white paper, the government revealed plans to promote consolidation in this market, in which two thirds of the 5,600 schemes have funding shortfalls.
The government is also introducing 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, and giving The Pensions Regulator (TPR) powers to disqualify company directors and new punitive fines.
Mr Opperman said that the Department for Work and Pensions (DWP) is currently consulting on an informal basis how the government can regulate the DB sector on an ongoing basis, “with a light but firm touch”.
The government’s goal is that they don’t “punish those who are doing a fantastic job, which are the vast majority”, but to “also induce the appropriate amount of regulation, to make sure this is fit for the future", he added.
Turning the DB white paper into legislation will have “a massive impact on the pensions framework generally, but also on the lives of many people up and down this country”, he argued.
Mr Opperman revealed that formal consolidation will be announced soon. FTAdviser reported recently that DB consolidation will be one of the first topics DWP will want the industry views on, as soon as next September.
TPR could apply its master trust authorisation regime to the new DB pension consolidators coming into the market.
Lesley Titcomb, The Pensions Regulator’s chief executive, told FTAdviser that she believes the watchdog should be in charge of approving the new DB superfunds, and that it is working with DWP on this topic.
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.
A second consolidator, Clara, is being created and is expected to come to market in the next few months.
According to Andrew Macintyre, chartered financial planner at Alan Steel Asset Management, "good legislation needs to balance protection for members and the trustees ability to take measured investment risks".
He said: "That is not easy and cannot be rushed. Consolidation also underestimates the number of smaller schemes that have good quality, experienced trustees and advisers that work take pride in managing these trusts well.