The UK Pension Schemes Bill – which has been described as ‘game-changing’ for the £2trn UK pensions industry – was introduced into UK Parliament earlier today.
The Department of Work and Pensions released details of the bill and said in a statement on its website, that 20 million UK workers were set to benefit from the bill’s introduction. Chancellor of the Exchequer Rachel Reeves called the bill “a game changer”, delivering bigger pension pots for savers and driving £50 billion of investment directly into the UK economy– “putting more money into people’s pockets through the Plan for Change.”
Work and Pensions Secretary Liz Kendall said: “Hardworking people across the UK deserve their pensions to work as hard for them as they have worked to save, and our reforms will deliver a huge boost to future generations of pensioners. The Bill is about securing better value for savers’ pensions and driving long-term investment in British businesses to boost economic growth in our country.
Optimism
The Department of Work and Pensions released details of the bill earlier today with UK Chancellor or the Exchequer Rachel Reeves calling the bill "a game changer"
Despite the optimism, some commentators are warning of “a long and winding road’ before any potential changes are seen as a result of the introduction. The wide ranging measures – that include increased flexibility for DB pension schemes to release surplus, legislating for defined benefits (DB) superfunds and defined contributions (DC) ‘mega funds’, requiring occupational DC schemes to deliver value for money, simplifying retirement choices by requiring all schemes to offer default routes to retirement income, and bringing together small pension pots worth £1,000 or less under a single roof.
Many people build up several small pensions as they move between jobs, and these can be hard to keep track of. The new rules will bring these pots together, helping savers see their full pension picture in one place.
The Bill also introduces a new system to show how well pension schemes are performing, this will help savers understand whether their scheme is giving them good value and protect them from getting stuck in underperforming schemes for years on end, to help working people feel more secure about their retirement savings.
‘Long and winding road’
David Saunders, Senior Partner at Sackers commented: “Described by the Government as a ‘game changer’, the Bill paves the way for some very major pensions developments. But a Bill’s passage through Parliament is a long and winding road, and there could be several twists and turns along the way. With detailed regulations to follow in many cases, there is therefore still a lot of ground to cover before the Bill’s provisions reach their ultimate destination as law.”
“New obligations included in today’s Bill represent the culmination of many years’ work in some instances. But the scale of some of the changes, coupled with ambitious Government timescales, means that the pensions industry should take a collective deep breath to ready itself for the weeks and months ahead.”
David Brooks, Head of Policy at independent consultancy Broadstone, said: “Following the publication of this Bill we hope to now see a period of delivery, consistency and certainty across the board in the pension’s world – no matter what colour of political party inhabits Number 10. Trust and security is critical to achieving positive outcomes, and constant tinkering with the system will inevitably confuse pension savers.
“Bringing today’s reforms together and executing on the promise they have will be a huge challenge and the industry will be looking for a clear plan and timeline from the Government to achieve this.”
“Many of the reforms are long overdue following ‘freedom and choice in pensions’ in 2014 and creating a default pathway for members reaching retirement with only DC benefits will assist many unable to make a choice, albeit presenting a challenge for trustees.
“If we consider these changes to the way providers build their default accumulation and decumulation products then, alongside the incoming pensions dashboard regime, this is likely to be a memorable Bill.”
Andy Briggs, CEO, Phoenix Life, said: “The Bill sets a clear direction for the future of pensions with the emphasis on building scale and ensuring savers receive value for money.”
Patrick Heath-Lay, Chief Executive, People’s Partnership said: “This is a pivotal moment in pension reform. The Bill contains many measures that will require providers to deliver better outcomes for savers and improve the workplace pension system.”
Nausicaa Delfas, Chief Executive, The Pensions Regulator (TPR) said: “The Pension Schemes Bill is a once in a generation opportunity to address unfinished business in the UK pension system. We have long advocated for fewer, larger well-run schemes with the size and skill to deliver better outcomes for savers. As such we are also pleased to see the proposed legislative framework for DB superfunds, providing options and choice in defined benefit consolidation.”
Michelle Ostermann, Chief Executive, Pension Protection Fund (PPF) said: “We welcome the introduction of this important Bill, especially the measures which would give the Pension Protection Fund (PPF) greater flexibility to reduce the levy, enable PPF and Financial Assistance Scheme (FAS) member data to be made available for pension dashboards, and better support members with a terminal illness. We will support the government and policy makers as the Bill progresses so we can achieve the best outcomes for all our stakeholders.
Jamie Jenkins, Policy Director, Royal London said: “The Pension Schemes Bill brings together several initiatives aimed at improving the pensions landscape for savers. While there are still many details to work through, this hopefully marks the start of a long-term strategic plan for pensions.”
