Pension Schemes Bill 2020 heralds most significant changes to pensions in a decade
The Government has today, 8 January 2020, published the Pension Schemes Bill 2020. The changes this brings are as expected and when implemented will bring about the most significant changes to pension funding and Regulator powers in over a decade.
Perhaps the most significant changes are the strengthening of the Regulator’s moral hazard powers and new civil and criminal sanctions for wrongdoing by those involved with running UK pension schemes. Commenting Wayne Segers, Head of Pensions Solutions at XPS said, “As we saw with the 2019 Bill, the powers and new penalties are wider ranging than may have been expected from consultations. Defences exist for trustees and employers and before companies embark on any material action it will be important to consider, mitigate and record the impact on the pension scheme.”
“The Bill also outlines expected changes to pension funding and strategic objectives for defined benefit schemes. The expected, imminent consultation from the Regulator on its new funding code principles will be essential to fully appreciate the impact of these changes. For these changes to be effective, however, it will be important that the Regulator can enforce any new requirements in a timely way. The Bill appears to outline that the process to do so will be similar to existing enforcement actions which can be drawn out and end up stuck in legal appeals processes.”
As for the 2019 Bill, the 2020 Bill allows for the creation of Collective Money Purchase Benefits, the Pensions Dashboard, greater protections for transfers out of DB schemes and tidying up areas of compensation by the Pension Protection Fund and definition of charges in Defined Contribution schemes. The one area that is still missing is anything on regulating to allow for DB Superfunds (stand-alone consolidators of pension schemes).