The Association of Consulting Actuaries (ACA) has renewed calls for the forthcoming pension bill to enable a rise to AE contributions, DB pensions to be simplified and for legislation to be included to allow CDCs and pension dashboards, saying there is widespread employer and industry support for such changes.
In total the ACA has set out five key policies proposals which it says should be included in the forthcoming pensions bill. This bill may be included in the Queen’s Speech on October 14, but there are now concerns that it will be delayed until after a general election.
These five key policy measures the ACA wants included are:
- Giving the Pensions Regulator easier and quicker access to its powers and enabling progress with a new DB scheme funding code
- Implementation of rules to allow for the launch of the pension dashboard
- Implementation on a planned basis of increases in minimum AE contributions
- Implementation of a Collective Defined Contribution (CDC) pension scheme regime
- Implementation of legal changes allowing defined benefits to be simplified (with no loss to the recipients).
The ACA says its headline figures from its most recent trends survey shows there is widespread employer support for these priorities, some of which go beyond current expectations of what will be included in the bill, as outlined by the pensions minister, Guy Opperman.
In total almost eight out of 10 employers (78 per cent) support a new DB scheme funding code. A similar proportion (76 per cent) support pension dashboards, while the ACA also found employers were sympathetic to AE total minimum contributions rising to 10 per cent of total earnings (subject to a cap) by 2021.
In contrast just under half (48 per cent) of employers support CDC schemes.
The survey also found a good deal of employer uncertainty over the merits of DB scheme consolidation, but 55 per cent said consolidation decisions were more likely if schemes were able to make legal changes allowing benefits to be simplified on the way into a consolidation vehicle.
ACA chair Jenny Condron says: “It seems increasingly likely a pensions bill will not progress through parliament until after a general election and whatever is currently well-progressed in a draft bill may then be the subject of a re-think.
“While we believe it may be unwise to rush out a bill in mid- or late -October if we are to see an election in late November, it would also be wrong for many of these well-developed draft policies to fall by the wayside.”
Condron adds that the ACA “noted” the comments made by the Work & Pensions Secretary of State’s at the Conservative conference, that business owners who ‘plunder pension pots’ could face jail.
She says: “But in our pension trends survey (2018) over 70 over of respondents believe extra powers in the bill for TPR should be proportionate. and only be targeted on unscrupulous employers rather than necessarily adding further regulatory constraints on all employers and/or trustees.