Big day for pensions with Pension Schemes Bill being read.

You can read its announcement from this link.

Millions of people across the UK will find it easier to manage and get more from their pensions thanks to the Government’s new Pension Schemes Bill. – DWP press release

The government will today introduce the much-anticipated Pension Schemes Bill to parliament, setting the stage for a wide-ranging and ambitious overhaul of workplace pensions in the UK.

The bill contains a significant number of policies and legislative changes affecting defined contribution (DC) and defined benefit (DB) pension schemes, as well as the Local Government Pension Scheme (LGPS).

These include many measures outlined in the final report of the Pension Investment Review, published last week, including:

The creation of DC “megafunds”, including requiring master trusts and other major auto-enrolment schemes to have at least one default arrangement with a minimum of £25bn in assets.

Changes to surplus rules, allowing trustees to release surplus funds to members and sponsoring employers “when safe to do so”.

Further requirements for LGPS funds and pools to accelerate the consolidation of assets and reduce the number of pools from eight to six.

New legislation for DB superfunds to encourage more providers to be launched.

The legislative framework for the planned Value for Money regime, including giving regulators the ability to shut down underperforming pension schemes.

A requirement on DC schemes to offer “default pension benefit solutions” at retirement, to ensure members are supported in taking their pensions.

The creation of a default consolidator system to automatically combine pension pots of £1,000 or less.

The bill will also allow data from the Pensions Protection Fund (PPF) and Financial Assistance Scheme to be displayed on dashboards, as part of the government’s pledge to support the further development of pensions dashboards.

It will give the PPF the ability to set its levy at zero without compromising its ability to raise more from the industry in future, and it will re-establish the Pensions Ombudsman as a “competent court” to make it easier to recoup money.

Chancellor hails ‘game changer’ Pension Schemes Bill

Rachel Reeves – gets involved

Rachel Reeves, who has played a leading role in the Pensions Investment Review and the proposed “megafunds” plan, said in the official announcement:

“The bill is a game changer, delivering bigger pension pots for savers and driving £50bn of investment directly into the UK economy – putting more money into people’s pockets through the Plan for Change.”

Torsten Bell at the Edinburgh PLSA conference

Pensions minister Torsten Bell added:

“We are ramping up the pace of pensions reform. Workers deserve to get better bang for each buck saved, and these sweeping reforms will make sure they do.

“Pension saving is a long game, but getting this right is urgent so that millions can look forward to a higher income in retirement.”

Liz Kendall; Torsten’s “boss”

Liz Kendall, the work and pensions secretary, 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.

“As part of our Plan for Change we’re helping people find work, stay in work, and ensuring that work pays them back to give them the secure income in retirement they deserve.”

How the Pension Schemes Bill will “proceed”

The bill must now go through parliament’s legislative process, during which it will be scrutinised and debated by policymakers in the House of Commons and the House of Lords.

The process can take several months, depending on other parliamentary activity, how many amendments are made, and how long it takes to agree on the final text. Bills typically follow this process:

The bill’s first reading is scheduled for today.
The second reading will be the first opportunity for MPs to debate the bill’s contents. Timings are yet to be confirmed.
A committee will then scrutinise the bill in detail and discuss amendments.
Further amendments may be tabled at the report stage.
The third reading is MPs’ last chance to debate the bill, but amendments cannot be made.
The bill will then pass to the House of Lords, where a similar process takes place.
After the third reading in the House of Lords, the bill will return to the House of Commons for further amendments to be considered. Both houses must agree on the final text.
Once the final text is agreed upon, the bill will then be granted Royal Assent and become an official Act of Parliament.

Further Information

To build scale in the pensions industry and stimulate UK investment, the Pension Schemes Bill will:
Require multi-employer Defined Contribution schemes, unless exempt, to have at least £25 billion of assets in their main default arrangement by 2030 or be on route to achieving that scale by 2035 through having £10 billion in their main default.
Allow trustees of well-funded Defined Benefit pension schemes to release money back to employers and their scheme members, when safe to do so, unlocking some of the £160 billion surplus funds to be reinvested across the UK economy and boost business productivity and deliver for members.
Legislate for Defined Benefit pension scheme superfunds to encourage growth of the superfund market and underpin the security of members’ benefits
Remove the restrictions that prevent the Board of the Pension Protection Fund (PPF) from reducing the annual pension protection levy it collects, when it is not required – allowing the PPF to collect less from businesses up and down the country
Extend the definition of ‘terminal illness’ in the Pension Protection Fund and Financial Assistance Scheme legislation, so that eligible members who are diagnosed as terminally ill can receive payments at an earlier stage of their illness.
To ensure better outcomes for savers, the Pension Schemes Bill will:
Introduce a Value for Money framework to enable a shift in focus from cost towards value and protect savers from becoming stuck in underperforming arrangements for extended periods.
Implement Default Pension Benefit Solutions which will mean savers will still have the options available to them through pension freedoms, but they will get an extra offer of support – through being enrolled into default solution(s) – which could include CDC provision, and they can take this or make their own choices.
Authorise providers to act as a consolidator scheme which will see members pots automatically transferred to their largest pot. This will also aid the building of scale with pots worth £1,000 or less consolidated into a small number of large, good value schemes.
Support the introduction of pensions dashboards to improve engagement by providing users with their whole pensions picture, including workplace and state pensions, securely and all in one place online. By providing this comprehensive overview of retirement savings, pensions dashboards will address key barriers to engagement, such as information fragmentation and lack of visibility.
Facilitate PPF and FAS information to be displayed on the Government-backed pensions dashboard service provided by the Money and Pensions Service.
The Competent Court measure in the Bill will also re-establish the legal standing of The Pensions Ombudsman (TPO) to make enforceable determinations in pensions overpayment recoupment cases without requiring a county court judge’s order, leading to quicker customer journeys and shorter waiting times.
More information on the Government’s Pension Investment Review can be found here: Pensions Investment Review: Final Report – GOV.UK