Will we get a Pensions Bill today? What should be in it?


This morning Pension PlayPen will be debating what we’d like to see in the King’s Speech, which Charles III will make later this morning. Indeed by the time we’ve shut up, the King may already be in full flow. Our debate will change nothing and is an exercise in loquacity.

Let’s start with the cold reality. Outside of the pensions bubble, a pensions bill is getting zero publicity, unless you are a pensions nut, you aren’t reading this blog!

Thanks to Alan Chaplin who provides this link to the Institute of Government, He thinks it’s 2-1 against us getting a Pensions Bill.

It will be more interesting to see how much “experts” get right and the answer could – in pensions terms- be a fat doughnut ZERO, IF there is no pensions bill.

If there is no pensions bill, the DWP will have lost its fight to get the infrastructure of the Mansion House reforms in place within this parliamentary term.

That would mean no primary legislation for

  1. the Value for Money Framework
  2. Superfunds
  3. Small pot consolidation
  4. Multi-employer CDC
  5. Better Trusteeship
  6. The continued consolidation of LGPS into Pools

The Mansion House reforms themselves are designed to regenerate the British Economy through releasing pension schemes to invest into productive finance. Many pension schemes already do (LGPS and open DB schemes). Some are starting – Nest and Cushon and Smart, but most workplace pensions are investing into listed securities where there is a surfeit of capital and not into UK growth stocks which are starved of the money to innovate and expand.

My belief has always been that there is a broad cross-departmental consensus that both the Mansion House reforms and the infrastructure that supports them need to be legislated for in 2024 to be on the statute book by the end of this current parliament.

It was on this assumption that I committed my and my company’s time to responding to the many consultations and though I do not expect all the consultations to result in legislation, I expect a pensions bill to carry through the key reforms.

At the PlayPen coffee morning , we will be asking which of the DWP’s babies will make it to childbirth.

Judging by initial noise, I would have expected the Value for Money framework to have made it but I am getting unsure. The proposal to condemn occupational pension schemes to an arbitrary £10,000 extra general levy, suggests that a more brutal way to get small schemes to consolidate has been found. The VFM framework is a lot of work and it moves the dial a little. It has not caught the popular imagination and frankly it became a bit of a bore after the weedy consultation response showed little appetite for innovation. So I think the VFM Framework has little chance of making it to legislation. It is my baby , I want employers to make decisions based on value and not price, but I fear for it.

As regards superfunds, yesterday’s announcement that one has arrived ahead of time  is clearly a huge boos for the Government’s DB consolidation agenda. While buy-out with an insurer may dwarf the superfunds today, the market does not need to reverse back far for the Gateway to open to more schemes like Sears. If the Government can show entrepreneurs how to share profits (as well as risks) from supporting members to get more than the PPF, then superfunds are go. The PPF has made it clear it wants to be a superfund, I don’t think it has popular support to do so. I see primary legislation to make it easier for superfunds to do deals and I don’t expect to see the PPF a consolidator. Superfunds make the cut as do other forms of alternative finance for DB schemes – that keep them open for longer. The big picture is the Government needs investment in gilts and productive finance and that’s not what they get from insurance buy-out.

Small pot consolidation is critical to the ongoing participation of Nest, Now , Smart, Peoples and Cushon. These are the remaining master trusts who depend on cashflows from auto-enrolment. They are like estuaries that are silting up, they will make for redundant harbors unless they are dredged, dredging means solving the small pots problem. The Government thought the industry could do this through co-operation, they thought wrong. The efforts of the small pots working group have not worked and I expect the Government to reluctantly intervene. It’s been a missed opportunity for the master trusts and indeed for the insurers who provide contract based GPPs. It seems we can’t play nicely – the Government will legislate for a retrospective solution and allow Tom McPhail and other innovators, to find a way forward.

The development of CDC is very difficult for Government. Something has gone horribly wrong with Royal Mail and we think it is to do with tax. It may be that Royal Mail has become such a cause celebre for the Government that a solution must be found at the cost of development of CDC in other areas. I hope not but I fear so. Alternatively, we may have legislation for multi-employer schemes in place before we see a dedicated employer sponsored CDC scheme. Whether the patience of the various stakeholders of the RM scheme will last much longer , I doubt. CDC is in quiet crisis and the Kings Speech needs to move matter on. As I have recently written, there is no commercial case for CDC, there are no Claras or Pension Superfunds lobbying. CDC is wallowing and I fear for its future. I hope for  but don’t expect a breakthrough. Of all the mansion house reforms , CDC as the RSA knows it, looks in greatest jeopardy. I expect more ineffective legislation from the DWP followed by more guidance from the TPR followed by very little action from the pensions industry who will find better ways to solve the problems of decumulation.

Better Trusteeship; The Mansion House paper on better governance was a little motherhood and apple pie. I doubt many people remember there was one, I suspect it was a sop to the governance brigade, but I very much doubt that the Government are that fussed about improving the quality and quantity of trustees, relative to the big picture reform rolled out by Chancellor Hunt.  It’s the Cinderella of the consultative agenda , it may make it to the ball, but it’s a bit Disney.

The continued consolidation of  LGPS into pools is a no-brainer. LGPS is doing everything right at the moment as a result of swerving LDI and allowing new members to regenerate its DB schemes as should have happened in corporate DB land. The Kings Speech can continue to legislate for the LGPS to do the right thing and that legalisation will end up retrospective. Like the trustee issues, the LGPS doesn’t need further legislation , it just needs leaving alone, the consultation proposals may make it to a seperate bill sponsored by DULUC but I doubt it. 

My best guesses

This blog, this morning’s session and my opinion count for nothing but for what it’s worth, here is my assessment of what the Government will put in a pension bill.

  1. Superfund legislation
  2. CDC legislation
  3. Small pot consolidation

I think they may include the VFM Framework

I think they’ll drop the trustee and LGPS stuff.

All the tax stuff on LTA will be dealt with in the Finance Bill coming out of the Autumn Statement later in the month, I hope that will also contain some detail on how the Government is going to sort the net pay anomaly. It may even promise a little about the timetable for introducing the 2017 AE reforms. I don’t expect further tax rabbits as the Treasury their eyes on the Mansion House.

Have your say

If you want to join us for some jaw-jaw in advance of the King’s Speech, here are the details.

Register here 

Use this link to join.

About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
This entry was posted in pensions. Bookmark the permalink.

Leave a Reply