16 October 2019
The Pension Schemes Bill has been published today containing details of proposed legislation outlined in Monday’s Queen’s Speech.
Steven Taylor, Partner at LCP commented:
“The Pension Bill provides much awaited new insight around how CDC schemes will operate in the UK. Most excitingly, the approach set out in the Bill appears much broader than the original Royal Mail model by allowing two or more connected employers to set up new schemes. This will be good news for other companies and organisations minded to follow the Royal Mail example and enable employees to join a pension scheme that provides an income in retirement.
“However, the implementation regime could yet prove fiendish with the Pensions Regulator potentially taking a very significant role. For example, the Regulator will need to be satisfied that schemes meet key requirements around financial sustainability and continuity, member communications and wider systems and controls, which could set new bars. This emphasises the need for significant scale from the outset and for companies interested in the CDC route it will be important to watch how these detailed regulations take shape.”
Alasdair Mayes, head of GMP equalisation at LCP, added:
“It’s a great shame that there is nothing in the Pensions Bill to streamline the GMP conversion legislation. Many are keen to use GMP conversion to equalise pensions for Guaranteed Minimum Pensions but want certainty on what is involved before pressing ahead. The DWP have acknowledged that there are several areas of their legislation that could be streamlined or clarified. The Pensions Bill was the perfect opportunity to do so.
“The DWP have spent years working with industry experts on how GMP conversion can be used to simplify the equalisation process. They should introduce the necessary adjustments to the conversion law as the Bill makes its way through Parliament, delivering much needed clarity so everyone can get on with the job.”