Following the first debate in the House of Lords on the 2020 Pension Schemes Bill, Royal London policy director Steve Webb has called on the DWP to listen to concerns about the legislation expressed by peers from all political parties.
During the debate, peers raised concerns about a number of issues in the Bill and about measures which were omitted.
Key topics included:
The new criminal sanctions designed to crack down on ‘bad bosses’ who recklessly underfund their pension schemes have been drawn, in the words of Baroness Drake, ‘incredibly widely’; this could put a much wider group of people including pension fund trustees at risk of criminal prosecution, and might discourage lay people from serving as trustees; similar concerns were raised by Conservative peers Baroness Neville-Rolfe, Baroness Noakes and Lord Kirkhope, Labour peer Lord Hutton and Lib Dem peer Baroness Janke;
The proposal to allow for new Collective Defined Contribution schemes (or ‘Collective Money Purchase’ schemes as they are known in the Bill) was generally welcomed, but several peers felt the legislation should pave the way for industry-wide CDC schemes and not just single employer schemes of the sort proposed by the Royal Mail;
On the pensions dashboard there was concern about the lack of detail in the Bill, the lack of progress on the project and the potentially limited scope of the information that would be featured, as well as differences of opinion on whether multiple dashboards were preferable to a single publicly run dashboard;
Peers criticised a number of omissions from the Bill.
“The general thrust of this Bill is widely welcomed but there are still serious concerns about both what is in the Bill and what is left out. Peers on all sides pointed out that the new powers to jail people when company pension funds go badly wrong could bring in a much wider group of people than ‘bad bosses.’”
Failure to implement the DWP’s own automatic enrolment review proposal to lower the starting age from 22 to age 18 (where ministers repeated the ‘mid 2020s’ timetable);
Failure to legislate for DB pension ‘consolidators’ – a point raised by Baroness Warwick who serves on the Board of the Pension Protection Fund;
Another major concern of peers was the lack of detail in the Bill, with particular concern that rules about how CDC Schemes will operate being left to subsequent regulations. The DWP Minister who opened the debate (Baroness Stedman-Scott) said that the House of Lords would be able to see ‘illustrative’ regulations before the next set of debates on the Bill.
Steve Webb, director of policy at Royal London said: “The general thrust of this Bill is widely welcomed but there are still serious concerns about both what is in the Bill and what is left out. Peers on all sides pointed out that the new powers to jail people when company pension funds go badly wrong could bring in a much wider group of people than ‘bad bosses.’
“This could in turn discourage lay people from being willing to serve as trustees, which would be a serious backward step. The Bill also fails to implement important changes to the pension landscape such as bringing more people into automatic enrolment and legislating for the vehicles for consolidating smaller pension schemes. Whilst the DWP can ultimately use its majority in the Commons to ‘ram through’ pretty much any legislation, the pension system would be better if it listened carefully to the concerns raised by peers and amended its own Bill.”
What do IFAs want?
According to recent Standard Life research, almost three quarters of independent financial advisers (IFAs) want the pensions dashboard to be a government priority in 2020,
It’s quarterly survey of financial advisers found further enhancement to auto-enrolment was the next biggest priority, with the issue cited by two fifths of respondents despite not appearing in the government’s Pension Schemes Bill, as reported in Pensions Age.
Greater powers over trustees for The Pensions Regulator and the development of collective defined contribution schemes were picked by 25% and 21% of respondents respectively.
Standard Life head of global savings policy, Jamie Jenkins, said: “Our latest poll of financial advisers confirms the industry is firmly on board with the roll out of pension dashboards, and wants the government to prioritise the timetable and design principles needed to get the project moving in 2020.”