The Pensions Bill announced in the Queen’s Speech today (October 14) will see new rules for pension dashboards, collective defined contribution schemes and new powers for The Pensions Regulator.
Queen Elizabeth said: “To help people plan for the future, measures will be brought forward to provide simpler oversight of pension savings.
"To protect people savings for later life, new laws will provide greater powers to tackle irresponsible management of private pension schemes.”
The government does not have a majority in parliament so it is uncertain whether the bill will make it into law. There have also been calls for a General Election, which could change the makeup of government and influence the bill's future.
The document included rules for pension schemes to provide data to pension dashboards – which will ensure people throughout the UK have easy access to information about their pensions, who manages them and what they are worth.
The bill will include provisions for the regulators to ensure relevant schemes comply, according to a briefing document.
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.
An industry delivery group, brought together by the guidance body, will set out a timetable for other fully operational dashboards, as well as setting standards and ensuring security across the portals.
The major part of the new bill, however, is expected to address CDC schemes, as the document provides a framework for the establishment, operation and regulation of this new type of pension fund.
These schemes differ from defined benefit pensions because they do not guarantee a certain income 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 defined contribution 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.
Royal Mail is the first company which is looking to set up one of these plans, after reaching an agreement with the Communication Workers Union to set up a collective scheme for its employees, which was given approval by workers in April 2018.
The bill also sets out new powers for TPR, which were first announced in the defined benefit white paper.
Besides creating new legislation to introduce a criminal offence to punish those found to have committed willful or grossly reckless behaviour in relation to a pension scheme, the government is giving the watchdog powers to disqualify company directors, and introduce new punitive fines.
The new rules also include powers for TPR to obtain the right information about a scheme and its sponsoring employer in a timely manner, so the watchdog can ensure that it is able to gain redress for pension schemes and members when things go wrong.
The government has also set out to improve DB schemes' funding system by requiring a statement from trustees on their funding strategy.
Nevertheless, the introduction of legislation in these three areas will depend on how the latest stage in the Brexit negotiations unfolds in the run up to October 31, said Bob Scott, partner at consultancy firm LCP.
He added: “The risk that the UK will leave the EU without a withdrawal agreement is looking increasingly likely and will bring further confusion and uncertainty to the current political landscape.”
Steve Webb, a former pensions minister and director of policy at Royal London, has criticised the rules proposed by the government.
He said: "This bill is notable more for the things that have been left out than for what it contains. The absence of vital measures on automatic enrolment and on regulating new ‘superfunds’ is a sign of a battle inside government where the Treasury once again has defeated the DWP.
"As a result, the vital expansion of automatic enrolment is now on hold, and the regulation of pension superfunds has been left in regulatory limbo. It is one of the biggest failings of UK pension policy that the department with lead responsibility for pensions can be thwarted in bringing forward sensible reforms by an over-mighty Treasury which has no vision for pensions."
maria.espadinha@ft.com
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