The Pension Schemes Bill is to receive Royal Assent and become law imminently after being approved by the House of Lords in the final stage of its parliamentary journey.
The bill managed to avoid a round of parliamentary ping pong after peers accepted the House of Commons amendments in a hearing yesterday (January 19).
It was reintroduced to the House of Lords at the beginning of last year (January 7) after the December 2019 general election delayed its debate in parliament.
It was then halted once again due to the government’s commitment to hurry through emergency health legislation to combat the effects of coronavirus.
But Sir Steve Webb, former pensions minister and partner at LCP, said a lot of the bill’s content now needs secondary legislation to actually come into effect, therefore there will be no changes made overnight.
Sir Steve said: “The new Pension Schemes Act will bring major changes to the pensions world in the coming months and years, once further detailed legislation has been published and implemented.”
The bill includes long-awaited rules around pension dashboards, collective defined contribution schemes, and new powers for the Pensions Regulator.
According to Sir Steve, major changes will be a requirement on pension schemes and providers to supply data to the pensions dashboards and there will also be rules which may make it easier for pension fund trustees to block transfers where they fear scam activity.
There will also be new powers to force companies to keep their pension schemes better funded, with the threat of jail time for those who wilfully refuse to do so, he added.
Sir Steve said: “Much of this will happen ‘under the bonnet’ as far as the public is concerned, but the Act is an important step in consumer-facing initiatives such as the pensions dashboard, and advisers will in due course be looking to access this new tool to streamline the advice process.”
In its final reading of the Pension Schemes Bill last year (November 16), the House of Commons voted down by a majority of 89 votes an amendment, which would have required the government to write to members five years before they could access their pot, offering them a Pension Wise appointment.
There was also friction between the Commons and the Lords on whether pension dashboards should allow users to engage in financial transactions, including the consolidation of pots and transfers between providers.
Ian Browne, pension expert at Quilter, said: “Opposition peers had concerns that allowing transactions to take place on a commercial dashboard could present an increased risk of fraud, and could lead individuals to make rash decisions with what is most likely to be their most important financial asset.
“However, the government’s preference is for dashboards to initially be limited to providing a simple ‘find-and-view’ service before evolving to allow ‘transactions’ at a later date, and today the government had their way.
“Exactly what transactions will be permitted will be decided by statutory instruments and technical regulations from DWP and the FCA at a later stage, but it is expected that it will cover the consolidation of pension pots, transfers between providers, and potentially the raising or lowering of contributions to an individual’s pension.”