The chairman of the Work and Pensions select committee has asked the pensions minister if defined benefit consolidation will be included in the upcoming Pensions Bill.
In a letter to Guy Opperman, published yesterday (July 30), independent Labour MP Frank Field (pictured) questioned the government's plans for the bill pointing out it was important to get legislation right in this area.
FTAdviser reported on July 4 that shadow pensions minister Jack Dromey said the awaited legislation wouldn’t include DB consolidation, but will instead focus on increased powers for The Pensions Regulator, collective defined contribution schemes and the pensions dashboard.
DB consolidation has been on the government's agenda, with the department for Work and Pensions publishing a consultation paper in December, which closed in February.
The consultation followed a DB white paper published in March 2018, in which 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 Field criticised the government's slow action on creating a regulatory framework for so-called superfunds, which are defined benefit scheme consolidators.
He quoted Charles Counsell, TPR’s new chief executive, who said at a hearing in June that if a superfund came to existence tomorrow or next week with a scheme that was part of the superfund, it would be based on a voluntary regulation process.
He added: “I don’t think that is the best place for us to be. I believe that we need proper regulation of superfunds to be in place.”
Mr Field said: “Leaving the risk that superfunds become active in a regulatory system not designed to accommodate them, however, cannot be an option.”
He questioned Mr Opperman about when the Pensions Bill will be published, and whether the legislation will include DB consolidation.
If this topic isn’t included in the new rules, Mr Field asked if the government will either seek to prevent superfunds from becoming active before regulation is in place, or if it will give TPR greater resource for the additional regulatory burden.
The Pension Superfund was created in March 2018, but saw a reshuffle of its leadership team six months later after CEO Alan Rubenstein, and one of its main investors, Warburg Pincus, announced their departure.
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