Queen's Speech includes new Pensions Bill
Three years after BHS and British Steel we will have a Pension Bill, maybe?
The Work and Pensions Select Committee published its report into BHS in July 2016. At the same time, the Government was consulting on the British Steel Pension Scheme. Now over three years later, the Queen’s speech signalled a new Pension Schemes Bill. As expected this will look at greater powers for the Pensions Regulator new funding rules, trustee statements, Pensions Dashboard and Collective Defined Contribution scheme.
The Queen’s speech is a welcome window into what may come for pensions if Parliament returns to some form of normal in the future. So we are cautious that any announcement may lead to change soon. But having said that, there is hope for broad cross party support for the pension changes announced.
Wayne Segers, Partner at XPS Pensions said “We hope to see a consultation from the Pensions Regulator on proposed funding changes soon. There is a real need for clear insights into expected new approaches to funding and targets and the power to enforce these. The Pensions Regulator has done its best to signal what the changes may be and taken clear steps in its Funding Statements. But in the absence of detail the market is currently having to guess where the benchmarks lie.”
Rail reform must bring pension reform
The speech also signalled expected reform of rail franchising. Currently there is large uncertainty of rail pension costs, exacerbated by the fact that current employees share the cost of any shortfalls.
Wayne Segers, partner at XPS Pensions commented “To balance the impact of pension cost on members a very small part of all future ticket prices over the long term could be secured to meet pension deficits. Doing this upfront will bring clarity to any new operating model going forward, remove the current significant uncertainty on rail pension funding, be affordable and secure pensions without pushing the cost onto current employees.”
We also welcome the environmental initiatives ensuring environmental principles are enshrined into law. This will help support pension schemes pursuing improvement in Environmental, Social and Governance aspects for the long-term benefit of pension scheme members.