Parliamentary.ai


by Munro Research

Pension Schemes Bill


Official Summary

A Bill to make provision about pension schemes; and for connected purposes.

Summary powered by AnyModel

Overview

The Pension Schemes Bill aims to improve the regulation and governance of pension schemes in the UK, focusing on defined benefit and defined contribution pensions, and introducing a new framework for superfunds.

Description

This bill covers several key areas:

Defined Benefit Pensions

The bill introduces provisions for local government pension schemes in England and Wales, including the creation of asset pool companies to manage pension funds, modifications to public procurement rules, governance reviews of scheme managers, and provisions for merging pension funds. It also introduces a power for trustees to modify schemes to allow payment of surplus funds to employers, subject to strict regulations and actuarial certification.

Defined Contribution Pensions

The bill seeks to improve value for money in defined contribution pensions by requiring assessments and the publication of performance data, member satisfaction surveys, and the assignment of value-for-money ratings. Pensions with “not delivering” ratings may be subject to intervention by the Pensions Regulator, potentially including transfers to better-performing schemes. The bill also introduces a framework for the consolidation of small dormant pension pots. This involves the creation of a data platform for identifying dormant pots, transfer notices to members, and authorizing consolidator schemes to take on these pots.

Scale and Asset Allocation

The bill introduces new requirements for certain pension schemes (Master Trusts and group personal pension schemes) concerning the scale of their assets under management and their asset allocation, aiming to promote long-term investment in the UK.

FCA-Regulated Pension Schemes

The bill gives the Financial Conduct Authority (FCA) powers to override contractual terms in certain FCA-regulated pension schemes, enabling unilateral changes for the benefit of members under a "best interests" test. This requires an independent person to certify such changes.

Default Pension Benefit Solutions

The bill mandates that relevant schemes provide default pension benefit solutions to eligible members, designed to provide regular retirement income. It outlines requirements for informing members about these options, and also addresses the treatment of members who are not suitable for these standard solutions.

Superfunds

The bill establishes a regulatory framework for superfunds, which are designed to consolidate at-risk defined benefit pension schemes. It sets requirements for authorization and approval of superfund transfers, ongoing governance, and procedures for handling events of concern (such as financial difficulties). This includes strict requirements related to capital buffers and ongoing monitoring to ensure solvency.

Miscellaneous

The bill contains miscellaneous provisions, including changes to rules regarding the alienation or forfeiture of occupational pensions, amendments to the pension protection levy system, and provisions relating to pensions dashboards.

Government Spending

The bill's financial impact is not explicitly stated in the provided text. However, it's likely to involve costs associated with increased regulatory oversight and the establishment of the new superfund framework, while it could also lead to potential savings in the long term by reducing the risk of pension scheme failures.

Groups Affected

  • Local Government Pension Scheme Members and Administrators: Impact on investment strategies, governance, and potential fund mergers.
  • Defined Contribution Pension Scheme Members and Trustees/Managers: Changes to value-for-money assessments, reporting, and potential transfers to better-performing schemes. Impact on smaller dormant pension pots.
  • Master Trust and Group Personal Pension Scheme Providers and Members: New requirements on scale and asset allocation.
  • FCA-Regulated Pension Scheme Providers and Members: Changes to contractual terms and unilateral change powers.
  • Pension Schemes in Financial Difficulty: Potential involvement with superfunds and implications for members and sponsors.
  • Pensions Regulator: Increased responsibilities for overseeing the new regulatory framework and taking enforcement actions.
  • Financial Conduct Authority (FCA): Increased responsibilities in relation to FCA-regulated schemes.
  • Employers: Impact on pension contributions and obligations.
Full Text

Powered by nyModel

DISCLAIMER: AI technology is not 100% accurate and summaries may contain errors, use at your own risk. Munro Research holds the copyright for all summaries found this website. Reproduction for non-commercial purposes is permitted but must be displayed alongside a link to this website. Contact info@munro-research to license commercially.