Whilst the Pension Schemes Bill 2019/2020 does not appear to have progressed since its Committee Stage in the House of Lords on 4 March, there has been activity in the background that provides an indicative direction of travel for the Bill. This activity pre-dates the Covid-19 pandemic, but the current crisis is unlikely to change any of the following developments.
Payment of dividends versus Deficit Recovery Contributions
Despite calls to the contrary, the Government’s position is that it is not appropriate for the Bill to provide for The Pensions Regulator (TPR) to oversee or approve the payment of dividends. Provided the funding plan is meeting the scheme’s needs, it is envisaged that there is likely to be no need for TPR to intervene in the payment of dividends. Some good news for businesses as the ‘stay home’ message is replaced by ‘stay alert’.
Central repository of SIPs
There is an initiative to develop a central index of statements of investment principles (SIPs). DWP and TPR have now identified a possible mechanism by which the web addresses where schemes SIPs and other documents are published could be collected and then published online. TPR’s scheme return is being explored as a collection mechanism.
The initiative could also be extended to Chair Statements and Implementation Statements. With the introduction of Statements of Strategy for DB schemes proposed in the Bill, it seems that, whatever the governance question is, the answer is a Statement!
TPR powers
In response to several questions and many concerns on the new penalties and sanctions under the Pension Schemes Bill, the government refuses to budge and still believes that the right balance has been struck between increased deterrents and protections for members, whilst minimising negative impacts on industry.
Dashboards
As expected, there will be a staged approach to ‘on boarding’. Nevertheless, the Bill ensures that regulations can capture all occupational and personal pension schemes, including legacy private pensions and private pensions not covered by the auto-enrolment requirements.
Dashboard providers will be brought within the FCA’s existing regulatory framework.
Transfer rights
As regards proposals to amend statutory transfer rights and to introduce a requirement to establish a ‘genuine employment link’ before taking a transfer, it is envisaged that regulations will contain relevant measures on evidence (including payslips and bank statements covering a three-month period).
It is also intended that regulations will include a condition requiring trustees of the ceding scheme to request information from the employer of the receiving scheme to evidence that the employer employs the member and participates in the scheme.
All steps in the right direction for combatting ‘pension scams’, which have reportedly increased during the pandemic.
Pension Schemes Commission
Finally, the debates on the Bill included the possibility of a Pension Schemes Commission. The government is non-committal, simply stating that such a commission is not the only way to identify options and recommendations for the future of pension schemes’ policy; nor is it the only way to engage with stakeholders.
I am not planning to hold my breath on the introduction of a new ‘Turner Commission’!