Industry welcomes govt's commitment on pensions

Industry welcomes govt's commitment on pensions

The industry has welcomed the government's renewed commitment to the Pensions Bill, saying the legislation will make "pre-planning for retirement a whole lot easier".

Speaking at the House of Lords yesterday (December 19) the Queen, on behalf of the government, said measures would be brought forward to "help people save for later life".

Supporting documents outlined the Pensions Schemes Bill, which was originally announced in the October Queen's Speech.

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The bill will see news rules for pension dashboards, collective defined contribution schemes and new powers for The Pensions Regulator.

It had already garnered cross-party support before being dropped as parliament was dissolved ahead of the December general election.

Gregg McClymont, director of policy at The People's Pension, said it was "good" to see the return of the Pensions Scheme's Bill while Jamie Jenkins, head of global savings policy at Standard Life, said it was "encouraging" to see the legislation return to the agenda.

The government said it would "provide a framework to support pensions dashboards", including rules that compelled pension schemes to provide accurate information to consumers. New powers for regulators would ensure the relevant schemes complied, the document said.

Nathan Long, senior analyst at Hargreaves Lansdown, said: "Pre-planning for retirement should get a whole lot easier as the government forces pension schemes to share member data.

"This is much needed, but the scale of the project means it looks unlikely we’ll see a dashboard until 2021 at the earliest."

The government also pledged to create a framework for the establishment, operation and regulation of CDC schemes.

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.

They are also different from traditional defined contribution plans in that they do not produce individual pension pots. 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.

Mr Jenkins said the move would provide "much needed certainty" for Royal Mail and other employers looking for a half-way house between DB and DC schemes.

The bill also sets out new powers for TPR.

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 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. 

John Greer, head of retirement policy at Quilter, said: "Hopefully [the Pensions Bill] will now see its way through the relevant processes and make the introduction of pensions dashboards appear realistic.