The absence of any mention of a Pensions Bill in the final King’s Speech of this parliament has been met with disappointment across the industry, with attention now turning to the chancellor’s autumn statement for guidance on how numerous ongoing policy issues will proceed.
A Pensions Bill had been widely expected, to include measures to push forward the government’s Mansion House reforms announced in the summer, including the development of collective defined contribution, consolidation of defined benefit schemes and incentivising schemes to invest in more productive assets. The absence of a Bill has led to speculation that progress on a wide range of issues will now slow down. But the PLSA says some policy changes may be possible through secondary legislation, guidance and standard setting.
PMI President Robert Wakefield says: “We are aware that there is likely to be little time to enact new legislation before the next election, but there are a number of issues that remain unresolved, and the absence of a Pensions Bill means that we that is no prospect of addressing these issues soon.
“Perhaps the most pressing unresolved issue at this time is the problem of finding an effective mechanism for the consolidation of small defined benefit pension schemes.
“We were delighted to learn that Clara has finally completed its first deal and will take over the Sears scheme. However, it still remains unclear as to how public sector schemes might be consolidated. Speculation that the Pension Protection Fund (PPF) might be used as a consolidator remains unaddressed, and this is now unlikely to be resolved for at least another twelve months.”
Steven Cameron, pensions director, Aegon says: “All eyes will now be on the Chancellor’s Autumn Statement. In July, the Chancellor set out his ambitions for defined contribution pension schemes to increase their investment in private equity, with a view to boosting the UK economy. The Government has been consulting on a raft of ideas to encourage such investment.
“The initiatives include a new value for money framework for defined contribution pensions which will shift the focus away from minimising costs to maximising value for members, including through seeking out new investment opportunities. Those schemes which can’t meet the new test will be expected to wind up and consolidate into a larger scheme, which is then more likely to invest in private assets. There are also plans for extending a new form of Collective Defined Contribution pension which is likely to have longer investment time horizons, making private asset investments more likely. There have also been consultations on plans to solve the issues with multiple small deferred pension pots and to open up a wider range of ‘at retirement’ choices to members of trust-based schemes.”
“While there’s no Pensions Bill to take these forward, we believe they remain Government priorities and await clarity on next steps. We encourage the Government to prioritise those initiatives with the greatest potential to boost retirement outcomes of individual members.”
David Brooks, head of policy, Broadstone, says: “Pedicabs beat pensions in the first King’s Speech in over 70 years with no mention of the Mansion House reforms or other much-rumoured pensions legislation.
“With the Autumn Statement on the horizon, focus now shifts to Jeremy Hunt’s announcement in a couple of weeks to see how the sprawling package of reforms will proceed. With rumours around defined benefit surpluses beginning to emerge as well as the existing raft of policy changes mooted on investment, consolidators, superfunds and small pots it would be peculiar if pensions were ignored again come November 22.”
Helen Morrissey, head of retirement analysis, Hargreaves Lansdown says: “Pensions policy reform always has the capacity to surprise and today’s King’s Speech was no different. It was widely reported to include a Pension Reform Bill to push forward key measures but when the announcement was made pensions were noticeably absent.
“This absence is confusing and means much needed progress in several areas could effectively grind to a halt before the next general election. The Autumn Statement could well include some pension announcements but without legislation scheduled the industry faces a frustrating time waiting for progress on these important reforms.”
Kalpana Shah, president, Institute and Faculty of Actuaries (IFoA) says: “Five years on from Sir John Kingman’s independent review of the Financial Reporting Council (FRC), we are disappointed that the Government has, once again, not committed to a clear timetable for the reform of actuarial regulation with no draft audit bill signalled in the King’s Speech. This means reforms to the FRC and actuarial regulation are now well underway without any statutory underpinning, requiring us to work in a grey area of oversight for an unspecified period, which we do not believe is in the public interest.
“Actuaries are essential to a well-functioning financial system. The work they do on a daily basis in the public interest ensures that people receive the pensions they are entitled to, that insurance products are priced accurately for customers and that companies hold sufficient capital to pay claims to their customers. The ongoing lack of regulatory clarity undermines our profession and our members’ ability to protect the financial interests of the public.
“Given the proximity to the next general election, it is unlikely that we will see any further progress in the near future. In the interim, we will continue to engage with the Government and regulators, including the FRC, on this important issue to ensure delays to legislation do not negatively impact our members and the public. We will also take some time to reflect on our position and provide a further update in due course.”
Nigel Peaple, director policy & advocacy, PLSA, says: “Earlier this summer, the Government set out very ambitious plans for a wide range of reforms on pensions. These covered both DB and DC pensions, accumulation and decumulation, the consolidation of pension funds and the quality of those managing and advising them. Some of these changes require primary legislation, a Pensions Bill, but others can be driven forward by secondary legislation or guidance.
“While the absence of a Pensions Bill in the King’s Speech does mean we won’t have a statutory basis for some of these initiatives, for example, support for savers at retirement, DB Superfunds, and small pots, we do expect Government and regulators to continue to pursue these objectives through guidance and standard setting. Indeed, some of the recent speeches by the CEO of the Pensions Regulator on consolidation and value for money make this very clear. Moreover, following the Government’s support for a Private Members Bill in the last session, we expect the Minister for Pensions to shortly propose secondary legislation to increase automatic enrolment contributions by introducing saving from the first pound of earnings and from age 18 instead of 22.
“Although it is disappointing that the Government did not include a Pensions Bill in today’s announcements, its absence will mean more time can be allocated to ensuring any reforms are well designed after in-depth consultation with the pensions sector. The PLSA looks forward to feeding into such work as it arises.
“Finally, we still believe it very likely that the Government soon will take more action on pensions, this time in the context of UK growth, at the forthcoming Autumn Statement. The PLSA recently proposed six necessary policy and regulatory reforms aimed at providing support to pension funds that wish to invest more in UK growth assets.”