Pension Schemes Bill paves way for UK pension reforms

What was in the King’s speech?

 The first King’s Speech of this new Parliament sets out the missions and priorities for the new Labour government. These include:

• delivering economic stability and stimulating growth
• driving investment in UK infrastructure, and
• introducing a new deal for working people

The Speech confirmed we can expect a Pension Schemes Bill to be brought forward in the first session of this Parliament. As well as containing measures to improve outcomes for savers, the Bill will also include measures which support the government’s missions to stimulate growth and secure more investment from UK pension schemes in UK infrastructure.

What measures will be included in the Bill?

The briefing notes which accompany the King’s Speech indicate the Bill will contain measures to:

• implement a solution to address the growing number of deferred small pots
• introduce a new Value for Money framework for DC schemes (both trust and contract-based)
• place duties on trustees of occupational pension schemes to offer a retirement income solution or range of solutions, including default investment options, to their members
• consolidate the DB pensions market through commercial superfunds, and
• reaffirm the Pensions Ombudsman as a competent court

What other Bills were announced?

 In total 40 Bills were announced in the King’s Speech. From a pensions perspective, other Bills of particular interest are:

• a National Wealth Fund Bill – this will establish the National Wealth Fund which is central to the government’s mission to deliver growth and a greener economy and to secure greater private investment in UK infrastructure and growth sectors 
• an Employment Rights Bill – this will be introduced in the first 100 days of the new government and will contain measures to ban exploitative zero-hours contracts, enhance employment rights and deliver a genuine living wage
• an Audit Reform and Corporate Governance Bill – among other things this will introduce a revamped regulator to uphold standards and independent scrutiny of companies’ accounts, as well as accountability for company directors

Comment

The new Chancellor has put increasing investment in UK productive assets from UK pension schemes at the heart of her growth agenda. Therefore, it is no surprise to see this feature in the King’s speech. 

In many ways the new government has picked up where the previous one left off with a continued focus on driving further consolidation among DB and DC schemes and by choosing to take forward initiatives started by the last government to improve outcomes for DC savers. Significantly, however, there is no mention of a public consolidator for DB schemes or any changes to the rules on return of surplus. Any formal response to the consultation which took place earlier in the year on these matters should therefore continue to be monitored.

One thing that’s not clear from these announcements is how the Bill will tie in with the government’s plan to undertake a review of the pensions landscape. We await clarity on the scope of this review. It is also unclear whether the review will be completed in time for any policy recommendations to be picked up in this Bill.