The minister for pensions and financial inclusion has detailed the main areas that will be covered in the upcoming Pensions Bill, which he said is “completely ready and good to go”.
Speaking at a fringe event at the Conservative Party conference in Manchester yesterday (October 1), organised by the Social Market Foundation and The Institute And Faculty Of Actuaries, Mr Opperman said his work on the bill was done, although he noted he was waiting for the Queen’s Speech – scheduled for October 14 – for the bill to be fully announced.
He said: “Nothing it is locked in until Her Majesty says the magic words but I have a bill that has been drafted, it is ready and addresses three key areas.”
Mr Opperman revealed the document has a “copious section on collective defined contribution [schemes], with 45, 50 clauses”.
This will set out “in great detail not only like how the likes of Royal Mail and Communication Workers Union can progress on CDC, and how CDC can be a third way on pensions, but also making clear that other organisations could potentially utilise this as a way to find a future for their defined benefit situations,” he noted.
He added: “It is very exciting, it is very innovative, and it genuinely has a real opportunity of solving the problems of large companies who have dated DB schemes and need to find a way forward.”
CDC schemes differ from DB pensions in the sense they do not guarantee certain incomes in retirement. Instead, CDC have a target amount they will pay out, based on a long-term, mixed risk investment plan.
These schemes also differ from traditional DC plans in that they do not produce individual pension pots. Instead they invest the savings in a larger collective pot, which provides an income to individuals during their retirement.
Mr Opperman also said the bill would address the DB white paper, putting it into statute.
The DB white paper sets out a series of measures for the TPR "to undertake a tougher and more proactive role".
He said: “We have set out revised roles in relation to everything, from trustees to obligations on how to monitor the adequacy of the DB scheme”.
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 introduce new punitive fines.
Finally, the pensions bill will bring in new rules on the pensions dashboard.
Mr Opperman said: “We are progressing with compulsion in respect to the schemes – it got a bit more complicated than I thought it would be originally – but the clauses are now drafted and ready to go.”
The government confirmed in December it will introduce multiple pension dashboards, with the first one being developed by the government's new guidance body, the Money and Pensions Service.