PLSA comments on new Pension Schemes Bill | Pensions and Lifetime Savings Association

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PLSA comments on new Pension Schemes Bill

14 October 2019

The Pensions and Lifetime Savings Association (PLSA) has commented on the announcement of a new Pensions Schemes Bill, following the Queen’s speech.

Nigel Peaple, Director of Policy and Research, PLSA, said: “Workplace pensions provide an essential retirement income for millions of workers so it is good to see the Government taking action on pensions with the publication of this Bill. It will provide much-needed legislative clarity to take forward the pensions dashboard as well as strengthening powers for the Pensions Regulator, enabling a stronger funding regime for DB pensions schemes and the creation of Collective Defined Contribution pensions. It is disappointing, however, the Government has chosen not to take much-needed action to allow for the option for Defined Benefit pensions to consolidate into superfunds to protect member benefits and create an incentive and achievable goal for employers to accelerate funding into schemes.”

Pensions Dashboard: 
“We fully support the Pensions Dashboard as a means of helping savers plan their retirement income. Measures that make it easier for people to see all of their pensions savings (state and private) in one place, supported, ideally, by planning tools such as the PLSA’s Retirement Living Standards, offer a major opportunity to help savers to achieve better retirement incomes. Requiring schemes to submit the saver data they hold to Dashboards will be important to ensure that savers have a complete picture of their pension savings is an important milestone for this initiative.” 

Powers For The Pensions Regulator: 
“While most pension schemes are well-run and managed, high-profile cases like Carillion and BHS damage confidence in the pensions system. We support new powers for the Pensions Regulation to take action sooner, impose significant fines, and have more oversight of risky corporate transactions in order to prevent reckless behaviour and protect savers’ hard-earned money.”

DB Funding Regime: 
“Clearer funding standards intended to focus on defining prudence and the appropriateness of recovery plans, alongside having a long-term view of funding, will shape the way the 5,500 private sector DB schemes and employers operate. We now await The Pensions Regulator’s consultations on a funding framework and revised funding code for DB schemes and look forward to working with them to make sure the new regime reflects the day-to-day experiences and needs of our members.”

Collective Defined Contribution pensions (CDC schemes): 
“CDC schemes offer employers increased flexibility and choice in how they structure schemes to benefit savers. CDC schemes may provide a good option for employers who want to replace a defined benefit scheme, but do not want to move to individual defined contribution.  They could also play a useful role in helping savers access the benefits of risk pooling in a DC environment, particularly in decumulation.”  

Superfunds: 
“It is disappointing there are no provisions in the Bill that would allow DB schemes the option to consolidate into superfunds. 11 million people in the private sector schemes rely on the benefits from DB pension schemes for a secure pension in retirement. However, despite employer contributions of £400 billion over the last decade, 3,500 DB schemes have a combined £188 billion deficit and 3 million people have just a 50/50 chance receiving their benefits in full. Taking forward the proposals from the 2018 DWP White Paper to strengthen protection for savers by allowing consolidation and the creation of superfunds to protect member benefits would create an incentive and achievable goal for employers to accelerate funding into schemes.”

Mark Smith, Senior PR Manager
 020 7601 1726 |  [email protected]k

Steven Kennedy, PR Manager
 020 7601 1737 | 07776 859241 | [email protected]