The Pensions Schemes Bill received its Royal Assent today, becoming the Pensions Schemes Act 2021, giving legal weight to the structure for the implementation of collective DC (CDC) schemes, the introduction of pension dashboards and rules requiring schemes to adopt and report against the Task Force on Climate-Related Disclosures (TCFD) recommendations.
The Act also brings in broader new powers for The Pensions Regulator.
The Government has indicated another pensions bill could be introduced this year, to facilitate DB superfund,
The Pensions Regulator chief executive Charles Counsell says: “Through the new Act, we will build on our clear, quick and tough approach to drive better standards across the pension schemes we regulate and ensure savers are treated fairly by employers.
“The Act gives us new powers to act against unscrupulous employers and enhances our ability to gather information more efficiently, and to scrutinise how defined benefit pension schemes are funded and the actions that affect them. We will be clear in our expectations when talking to trustees, employers and others, and quick to take effective action where we have concerns. Trustees will be expected to demonstrate how their funding approach is prudent, appropriate and sustainable.
“We will continue to work closely with the industry and other stakeholders to produce the necessary codes and guidance to ensure the measures are introduced in an effective way. We are a risk-based and proportionate regulator and this measured approach will continue. Our work is driven and directed by the pursuit of our statutory objectives and we use our powers where appropriate and reasonable to do so.
“The Act highlights that pension scheme trustees should be considering the effects of climate change, and we can expect regulations requiring them to engage more fully with the risks and opportunities arising from the response to this global emergency. We too are stepping up to meet this challenge and will be launching our own climate strategy during 2021.”
Aon partner and head of UK Retirement Policy Matthew Arends says: “This legislation brings CDC schemes into reality and with the increasing decline in the private sector of defined benefit schemes, it offers the possibility for DC savers to achieve an income for life from their DC savings in both an efficient way and without having to make complex investment decisions.
“Sitting alongside familiar DB and DC benefit designs, CDC can now offer something different and welcome, so we are approaching an exciting time.
“This new legislation opens up the opportunity to enable single employer CDC plans. But it shouldn’t stop there – the path should now be open for Government and the Department for Work & Pensions to move ahead at pace with the second phase of enabling legislation. This would provide wider-reaching options, making CDC accessible in a variety of ways – potentially including CDC master trusts, decumulation-only CDC platforms, and industry-wide or multi-employer CDC plans.”