There was no mention of automatic enrolment reform in the Queen’s Speech, but bills around local boycotts, online safety and a revamped audit and reporting framework will all impact the industry, experts have said.
Campaigners have promised to take to the streets to protest a bill aimed at tackling local boycott, divestment and sanctions campaigns by public bodies including the Local Government Pension Scheme.
Meanwhile, pensions minister Guy Opperman has promised that a consultation into a new value for money framework will be held this year, probably in November.
No room for auto-enrolment
It had been hoped that auto-enrolment reforms implementing the 2017 review proposals might find a place in the government’s headline legislative agenda, but mounting short-term challenges ranging from immigration to cost of living meant there was little room for pensions policy when Prince Charles delivered the Queen’s Speech on May 10.
Opperman has repeatedly declined to give a timetable for implementation, angering those who see lowering the age limit, abolishing the earnings trigger, and reducing the qualifying earnings limit as key to boosting savings.
It is understood that the government hopes to find time to look again at the 2017 review towards the middle of this decade.
Nigel Peaple, director of policy and advocacy at the Pensions and Lifetime Savings Association, said the range of challenges facing the government explained the absence of auto-enrolment reform, but added that employers “need time to prepare”, so it “would be good to put this on the statute book now with a gradual and clear timetable for the introduction of the measures”.
Anti-boycott bill triggers street protests
Other measures announced in the Queen’s Speech will have a bearing on UK pension schemes, however, beginning with the long-trailed introduction of a bill aimed at tackling “local boycotts”.
This legislative response was made necessary by the government’s defeat in the Supreme Court in a case brought by the Palestine Solidarity Campaign that opened the door for local government pension schemes to pursue targeted boycott, divestment and sanctions campaigns against the state of Israel, and — theoretically — other entities activists argue breach human rights laws.
Our first act will be taking to the streets of London this Saturday to protect our right to boycott.Ben Jamal, Palestine Solidarity CampaignMPs backed an amendment to the public service pensions and judicial offices bill in February that would have seen the ban reimposed, but the government has now introduced a bill specifically designed to achieve this effect, arguing that such a move is necessary to maintain the integrity of UK foreign policy, and to prevent “divisive behaviour that undermines community cohesion across the country by stopping public bodies from imposing their own boycott, divestment or sanctions campaigns”.
“There are concerns that such boycotts may legitimise and drive antisemitism, as these types of campaigns overwhelmingly target Israel. Such campaigns result in undue politicisation of public institutions,” it explained.
The bill will empower the government to ban public bodies that are subject to public procurement rules from conducting boycott campaigns against foreign nations and entities, and prevent them from targeting the sale of goods and services from same, as well as UK businesses that trade with them.
The PSC has repeatedly denied that boycott campaigns are motivated by, or increase the prevalence of, anti-semitism.
PSC director Ben Jamal said: “Though the government has been threatening this legislation for several years, it is no less outrageous to see such an anti-democratic bill presented in one of the oldest seats of democracy.
“Boycotting is a legitimate, historically recognised tactic and the right to employ it is a core democratic right.”
He promised to fight the bill, saying: “Our first act will be taking to the streets of London this Saturday [...] to protect our right to boycott.”
Online safety provisions welcomed
Despite significant public concern about its impacts on free speech, the government’s online safety bill was at least welcomed by those in the industry who have long demanded that more be done to tackle online fraud, fake adverts and unlicensed financial promotions.
MPs and industry experts had warned for some time that the existing law imposed too few obligations on social media companies and other online platforms to protect users from fake and fraudulent content, especially pension scams.
Though the private sector did make some concessions after engagement with the Financial Conduct Authority, there were calls for the online safety bill to go further, with consumer group Which? demanding that it include paid-for advertisements in a bid to tackle the rising number of scams, and which has now been done.
This bill is the perfect opportunity to require search engines and social media platforms to remove sham investment and impersonation scams promptly from their sites and conduct the necessary due diligence to stop them from appearing.Matt Burton, QuilterSignificantly, the bill designates Ofcom as the independent online safety regulator, equipping it with “robust enforcement powers”, according to the Queen’s Speech.
These include the ability to level fines of up to £18mn or 10 per cent of qualifying annual turnover, as well as “business disruption measures” and the placing of criminal liability on the managers of tech companies for non-compliance.
Yvonne Collins, head of financial crime prevention at Phoenix Group, said: “We have been calling for this throughout the consultation as we believe it is urgently needed to protect society, with unlicensed financial promotions and fake ads targeting the most vulnerable, and we welcome its passing. It was crucial that the measures to crack down on fraudulent online advertising were not watered down.”
She added: “We urge people to remain vigilant of any offers of unrealistically high financial returns or free pension reviews which are often too good to be true. Taking the time to check that a website is secure before sharing personal details, inspecting the URL, or simply asking whether a deal sounds realistic could stop you being scammed.”
Matt Burton, chief risk officer at Quilter, concurred, saying: “This bill is the perfect opportunity to require search engines and social media platforms to remove sham investment and impersonation scams promptly from their sites and conduct the necessary due diligence to stop them from appearing.”
Auditing the auditors
Despite reports that an audit reform bill was due to be dropped from the Queen’s Speech, the government did find time to include a draft bill aimed in part at improving protection against risk to pensions.
The government said its aim was to “rebuild trust” in the UK’s audit, corporate reporting and corporate governance systems following a string of high-profile failures, as in the case of retail group BHS, which collapsed with a £571mn black hole in its pension plans.
The new bill, which is only a draft at this stage, would see a new regulator — the Audit, Reporting and Governance Authority — created as the next stage in the evolution of the Financial Reporting Council.
The new regulator will be given “effective powers to enforce directors’ financial reporting duties, to supervise corporate reporting, and to oversee and regulate the accountancy and actuarial professions”, the government explained.
Meanwhile, the draft bill would also reform the regulation of insolvency practitioners “to give greater confidence to creditors [and strengthen] corporate governance of firms in or approaching insolvency so that ‘asset stripping’ can be more effectively tackled”.
Value for money consultation
Finally, speaking at a Pension Playpen event before the Queen’s Speech, Opperman gave an update on the proposed new value for money framework, praising the Pensions Regulator and the FCA for creating a joint discussion paper, but adding he had “very much decided to take that over”.
“Our intention is to consult this year on value for money,” he said, and — though not drawn on a specific timeframe — suggested November would be a realistic date.
Opperman said there were three broad areas to consider in any consultation over what constitutes value for money, the first being costs and charges, which he said should no longer be the “number one metric”.
He argued that investment performance was at least as important, saying “outcomes for the consumer is what I am most interested in”.
The third element, he said, was customer service, albeit he added that he was “dubious about customer service being the key driver” as “what is customer service to the pensions organisation is often not customer service to the individual consumer”.
Opperman blamed his predecessors for creating a system under which it is impossible to compare costs and charges, and expressed his hope that there will, in the long-term, be “a single cost and charge”.
He encouraged the industry to share its views, stressing that he wanted to hear about solutions and not problems, repeating a much-criticised criticism of the industry made in March, where he suggested that the industry was too quick to talk about problems and spent too little time on long-term planning.
Benjamin Mercer is a senior reporter at Pensions Expert, FTAdviser's sister publication
