The government has announced a new Pension Schemes Bill to legislate on several areas of pension policy, many of which were initiated under the previous Conservative government.

In the King’s Speech, the new Labour government confirmed plans to legislate on proposals for a value for money framework and the consolidation of small pension pots.

The bill also included plans for trust-based schemes to be legally required to offer retirement income solutions to members, including default investment options.

Proposals for legislation on defined benefit commercial superfunds were part of the bill, although it did not mention potential legislation to allow the Pension Protection Fund (PPF) to act as a public sector consolidator.

However, LCP partner and former Pensions Minister, Steve Webb, noted that it may be that the necessary legislation for the PPF as a public sector consolidator was not prepared in time, rather than the government has dropped the idea.

Reforms to The Pensions Ombudsman (TPO) were also included, with the government aiming to reaffirm TPO as a ‘competent court’ through the re-establishment of powers and removing the need for schemes to apply to the courts to enforce TPO decisions in relation to overpayments.

Mention of auto-enrolment reform was absent from the bill, despite widespread industry demand for the expansion to be brought forward.

Furthermore, Webb stated that the measures included in the bill to tackle the large number of ‘micro’ pension pots only dealt with pots under £1,000, and that the government may need to take further action on the consolidation of small, deferred pots, as this will still leave millions of people with slightly larger pension pots that will remain scattered across the pensions landscape.

“This Pension Schemes Bill very much represents ‘business as usual’ when it comes to pensions policy,” Webb stated.

“There appears to be nothing in the legislation that so far represents a distinctively ‘Labour Party approach’ to pensions, and a Conservative minister could happily have brought forward this legislation.

“Perhaps inevitably, it will take time before we see how the new government’s agenda differs from that of its predecessor. But this does mean that any distinctive policies will have to await legislation later in this parliament and may take time to have effect."

Commenting on the use of value for money measures to drive out under-performing defined contribution schemes, Webb added: “Whilst the government understandably wants to drive out the smallest pension schemes, some of which may not be well run or delivering a good return, it is important to remember that the vast majority of people are not saving in small pension schemes.

“What matters to most savers is the performance of the largest schemes, including industry-wide master trusts, and the new value for money framework is unlikely to change much for those schemes, at least in the short-term.”

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