Overview

This bill amends the Pensions Act 2004 and the Companies Act 2006. It removes the cap on compensation paid by the Pension Protection Fund (PPF) to members of failed pension schemes and introduces a requirement for pension scheme trustee and Pensions Regulator approval before public companies can distribute dividends.

Description

The bill makes two key changes:

• Removal of the PPF Compensation Cap: The bill removes the existing cap on compensation payments from the Pension Protection Fund (PPF). This means that if a company's pension scheme fails, the PPF will be able to pay out the full amount of compensation to affected members, regardless of a previous limit.
• Dividend Distribution Approval: The bill requires public companies to obtain written approval from both their pension scheme trustees and the Pensions Regulator before distributing dividends. This aims to protect pension scheme assets by ensuring that dividend payouts do not jeopardize the financial health of the pension scheme.

The bill applies to England, Wales, Scotland, and Northern Ireland and will come into force six months after it is passed.

Government Spending

The removal of the compensation cap in the PPF could significantly increase government spending, as the PPF is ultimately backed by a government levy. However, precise figures are not provided in the bill text itself, and the actual financial impact will depend on future claims.

Groups Affected

The following groups will be affected:

• Pension Scheme Members: They may benefit from receiving full compensation in case of pension scheme failure (removal of compensation cap).
• Pension Scheme Trustees: They will have increased responsibilities in approving company dividend distributions.
• Pensions Regulator: They gain more oversight on dividend distributions by public companies.
• Public Companies: They face new procedural requirements before distributing dividends, potentially impacting their financial flexibility.
• UK Taxpayers: Potentially impacted through increased government spending to support the PPF if claims increase significantly.

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