At the state opening of Parliament on July 17, 2024, the King's Speech set out the new Government's intention to introduce a Bill legislating on several areas of pension policy.
Although the Bill is yet to be published, background briefing notes set out the areas below that are due to be covered by the new legislation. The progress of many of these proposals was halted due to the dissolution of Parliament for the General Election.
- Implementation of a solution for the consolidation of deferred small pension pots to prevent members losing track of their savings from multiple employments.
- Introduction of a value for money framework for trust-based defined contribution schemes, including a standardised test to demonstrate value for money. The FCA will introduce rules applying the framework to contract-based DC schemes.
- Imposing a new duty on trustees of occupational pension schemes to offer guided retirement products to members, including "a retirement income solution or range of solutions" and "default investment options". This is to ensure that people have pension options rather than simply a savings pot when they stop work.
- Consolidation of the defined benefit market through commercial "superfunds".
- Reaffirming the Pensions Ombudsman as a "competent court" thus removing the need for pension schemes to apply to the courts to enforce Ombudsman determinations in relation to overpayment recovery. In the period before implementation, the Ombudsman has confirmed that its December 2023 factsheet continues to be relevant.
- Continuing with the amendment to the special rules for end of life set out in a previous Private Member's Bill governing the Pension Protection Fund and Financial Assistance Scheme to extend the definition of "terminal illness". This would allow eligible members to receive a lump sum payment at an earlier stage when life expectancy is 12 months, rather than the current six months.
Comment
The pensions proposals in the new Bill, which should appear in the next 12 months, were broadly welcomed. The baton has been picked up from the previous administration on many of these measures which were initiated by the previous government under its Mansion House agenda. Overall, the new Government says its intentions are to introduce measures to develop a private pensions market that "encourages consolidation and focuses on value and outcomes for members".
While the background notes to the new Bill make reference to the "huge success" of the auto-enrolment regime, they do not specifically cover its extension self-employed, nor mention any increase in the levels of contributions by all savers. Hopefully, these additional measures will be pursued early in this Parliament.
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