Issues affecting all schemes
Pensions Bill continues its passage through parliament
The Pensions Bill has moved to the Committee stage. The Bill is substantially the same as when it was first introduced in 2019 (before being put on hold for the election) but a reminder of the key provisions is below. (Note that not all provisions apply to both defined benefit schemes and defined contribution schemes – some apply to just one type of scheme).
New Pensions Regulator powers:
The new legislation will strengthen the Regulator's powers, for example, by:
- introducing new criminal offences for (a) failing to pay a contribution notice without reasonable excuse, (b) avoidance of a s75 debt, and (c) wilfully or recklessly putting pension savings at risks (the last two carrying a potential prison sentence of up to seven years and/or an unlimited fine)
- giving the Pensions Regulator power to issue civil penalties of up to £1m for certain breaches, including for failure to comply with the notifiable events reporting requirements (which will themselves be strengthened and extended)
- introducing new grounds for the Regulator to be able to issue a contribution notice
- providing the Regulator with new informationgathering powers including the power to summon a person for interview or conduct "dawn raids" on businesses (failure to attend an interview or refusing to answer questions will be a criminal offence)
Long term DB funding strategy:
The legislation will require trustees to put in place a "funding and investment strategy" designed to ensure that benefits under the scheme can be provided over the long term. The chair of trustees will need to sign and submit this document to the Regulator with an accompanying statement.
Collective defined contribution schemes:
The Bill introduces the necessary framework for collective defined contribution (CDC) schemes to be established. CDC schemes are new to the UK; they invest members' and employers' contributions collectively (rather than in individual member accounts), contributions are fixed and, although members have a target pension, benefits may be adjusted depending on investment returns.
Pensions dashboards:
The Bill establishes a framework for pensions dashboards to be established, including provisions to require pension schemes to provide information. Most of the detail will be set out in regulations.
Members' transfer rights:
In the light of concerns about transfers to scam arrangements, the Bill includes powers to make regulations allowing trustees to require further information from a member before the member can take a transfer, including information about their employment and place of residence.
Download >> The Pensions Brief: February 2020 (PDF)
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