The Future of Pensions – What the new Pension Schemes Bill means for you 

Nearly a year after the King’s Speech and a week after the flurry of pension consultation responses, the Government will publish the Pension Schemes Bill today. This wide-ranging bill will impact every funded pension arrangement in the UK, covering massive structural changes down to small tidying up actions. 

For DB schemes, we will see the Government remove barriers for trustees and sponsors to access surplus, the superfund put on a statutory footing and changes made to the PPF’s rules. 

PPF levies: The immediate impact will be to allow the PPF to switch off levy payments, and it will be interesting to see if the Bill extends to refunding “overpaid” historic levies. 

Surplus / superfunds: The Bill signals a step change in Government’s attitude to insurance buy-out being the gold standard for schemes. With more flexibility over surplus to facilitate long-term run on, and a statutory framework for superfunds as an alternative endgame. Trustees and sponsors will have more options than ever. 

Virgin Media: It looks like the industry will be pleased that the Government has confirmed that is will be bringing forward easements to deal with the Virgin Media case. 

As widely trailed the Government is taking a more interventionist approach to DC Schemes, accelerating consolidation through ‘mega-fund’ requirements and the ability to bulk transfer legacy contract-based arrangements. 

Mega-funds: Clearly there are potential benefits in scale, albeit with a risk of less competition. There will be a significant shake-up in pension providers as they jostle to become one of the chosen few, and the uncertainty may be disconcerting for employers and members. 

Decumulation, small pots and VfM: The measures on decumulation and small pots are very much member-friendly, forcing schemes to provide a default retirement solution for members, automatic consolidation of small pots and the implementation of the Value for Money framework with a focus on performance. 

Investment: However, the industry will feel a cold chill down its spine at the introduction of a reserve power for the Government to mandate pension investments. Even if it’s never invoked its mere existence will give government significant leverage over pension providers. 

Pensions AM: Pensions Bill Breakfast Briefing

Watch the recording of our Pension Schemes Bill breakfast briefing – giving the inside track on the next steps sponsors and trustees should consider to optimise their DB and DC schemes following the recent publication of the Bill. Watch here.