Recommendations to reform auto-enrolment, despite receiving the backing of the Department for Work and Pensions, were absent from the bill.
Much-anticipated pensions legislation was outlined today (14 October) in the government’s Pension Scheme Bill in the Queen’s Speech, but some key issues have been left unaddressed.
Recommendations to reform auto-enrolment, despite receiving the backing of the Department for Work and Pensions, were absent from the bill, a move that prompted criticism from former pensions minister Steve Webb, director of policy at Royal London.
The reforms would have included lowering the minimum enrolment age from 22 to 18 and ending the “qualifying earnings floor”. Also absent was regulation around “defined benefit Superfunds”.
The reason for the absence, Webb says, is a split inside the government over pensions. He notes: “It is one of the biggest failings of UK pension policy that the Department with lead responsibility for pensions can be thwarted in bringing forward sensible reforms by an over-mighty Treasury which has no vision for pensions.”
But, there were plenty of positives, with rules introduced for pension schemes to provide data to pension dashboards. The dashboard is a technological initiative that will allow pension savers to see all their pension pots in one place. In April, the government gave the green light for pension dashboards to be made available from this year, but as things stand today this has not yet materialised.
The announcement has been welcomed by AJ Bell, with Tom Selby, a senior analyst at the online broker, noting that “dashboards have the potential to revolutionise retirement engagement in the UK”.
Selby continues: “While there has been cross-party support for the introduction of dashboards, it had until now not been entirely clear whether Boris Johnson was a fan.
“The fact the reforms have been given the green light from Number 10 via the Pensions Bill means work developing and testing dashboards can now begin in earnest.”
Steve Cameron, pensions director at Aegon, also welcomed the move. He noted: “Millions of individuals have multiple pensions in which they’ve built up benefits over their working lives and Pension Dashboards will for the first time allow them to see all of these, online at the touch of a button.
“This offers a huge opportunity to help millions of individuals better engage with their retirement planning, understanding if they are on track for the retirement they aspire to, and if not, to take action accordingly.”
Another highlight of the bill was its proposal for protecting those in defined benefit pension schemes. The bill gives the regulator more ability to set and enforce clearer scheme fund standards. Company executives would also face tougher punishments for negligence or wrongdoing surrounding defined benefit schemes, including a potential prison sentence of up to seven years and a fine of £1 million in the worst cases.
With the government not able to command a majority in the House of Commons, it is possible that the bill will end up being voted down.