Overview

This bill amends the Pensions Act 2004 and the Companies Act 2006. Key changes include removing the cap on compensation from the Pension Protection Fund (PPF) and requiring approval from pension scheme trustees and the Pensions Regulator before public companies distribute dividends.

Description

The bill makes two primary changes:

Removal of Compensation Cap

The bill removes the existing cap on compensation payments from the Pension Protection Fund (PPF), which protects members' pensions if their employer's pension scheme fails. This means that individuals whose pensions are covered by the PPF could receive higher compensation if their scheme collapses.

Dividend Distribution Approval

The bill mandates that public companies must obtain written approval from both their pension scheme trustees and the Pensions Regulator before distributing any dividends. This added layer of oversight aims to ensure that companies maintain sufficient funds to meet their pension obligations.

Government Spending

The removal of the compensation cap is expected to increase the PPF's potential liabilities. The precise financial impact on government spending is uncertain and will depend on future claims on the PPF. There is no explicit mention of any direct government spending increases associated with this bill.

Groups Affected

The bill will affect several groups:

• Pension scheme members: Could benefit from higher compensation in case of scheme failure (due to removal of the cap).
• Pension scheme trustees: Gain greater control over dividend distributions by companies, potentially safeguarding members' pensions.
• The Pensions Regulator: Assumes a more active role in overseeing dividend distributions, enhancing their ability to protect pension schemes.
• Public companies: Face additional procedural requirements before distributing dividends.
• Shareholders: May experience some limitations on dividend payouts due to the added approval process.

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