Frank Field has warned that the government risks a new pension scandal if legislation for defined benefit superfunds is not introduced.
This was after the chairman of the Work and Pensions select committee wrote to the Department for Work and Pensions questioning when the new Pensions Bill will be presented to parliament and expressing concerns about defined benefit pension schemes being able to consolidate without regulation being in place.
He had not received confirmation from Guy Opperman, the minister for pensions and financial inclusion, of whether a new regulatory regime for consolidators would be included in the Pensions Bill in response.
Mr Field said: “Why won’t the government act when it knows what can happen to life savings even when there is regulation?
“The Queen’s Speech must outline government action on this front, with full regulation of superfunds, if we are not to see more workers robbed of their due entitlement exactly as happened at BHS and British Steel.”
The chairman is particularly concerned about the two consolidators in the market – the Pension Superfund and Clara Pensions – which currently do not have a bespoke regulatory regime governing them in place.
Neither superfund is active yet, but it has been reported that the Pension Superfund has entered into agreements with two as yet unnamed schemes about a possible consolidation.
Mr Field quoted Charles Counsell, The Pensions Regulator's chief executive, who said at a hearing in June that if a superfund came to existence tomorrow or next week, it would be based on a voluntary regulation process.
In his response letter, Mr Opperman said he and DWP officials meet regularly with TPR about the two superfunds.
He said: “My officials are working hard with officials from across government, regulators and key stakeholders to develop a regime which strikes the right balance between member security, affordability and commercial viability.”
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 had funding shortfalls at the time.
Mr Opperman added: “TPR and I are very clear that we need to act, I hope to publish a formal response to the consultation before Christmas if I can get agreement of the way ahead.”
What do you think about the issues raised by this story? Email us on firstname.lastname@example.org to let us know.