Despite broad support for the Pension Schemes Bill, there are various ways in which it could be improved, the Society of Pension Professionals (SPP) has said, reiterating its concerns over plans for a reserve power to mandate investment in private market assets. 

In its response to the Public Bill Committee's call for evidence on the bill, the SPP said that it is supportive of most of the broad aims of the proposals, from Pension Protection Fund (PPF) levy flexibility and surplus release to the concept of default decumulation and improving value for money for defined contribution (DC) schemes.
 
However, the group reiterated its concerns over the plans for a reserve power for the government to mandate investment in private market assets, warning that the bill leaves a lot of the details of the asset allocation requirement to be prescribed by regulation. 

"For DC schemes, the reserve power to mandate investment in private market assets in s28C is one of the very few parts of the Pension Schemes Bill that the SPP does not support," it stated. 

"We recommend that this mandation power be removed from the bill... The Delegated Powers Memorandum is silent on what is intended - we believe parliament needs better visibility now of what will be covered if the relevant section as drafted receives Royal Assent.

"We have provided details of the key elements which should be disclosed for consideration while the bill is being debated." 

This builds on previous concerns raised by the group, as the SPP previously argued that, far from being a reserve power, the current drafting means the provisions in the Pension Schemes Bill would require schemes to comply with the asset allocation requirement from 2030, as its introduction is linked to the introduction of the new scale requirements.

This was not the only area of improvement highlighted by the SPP though, as it also clarified that whilst it is supportive of the overarching aims to both invest more in the UK and boost saver returns, consolidation of multi-employer DC schemes is not necessarily the best way to achieve this. 

"The minimum pension fund scale requirement of £25bn assets under management (AUM) will not necessarily drive additional investment diversification or deliver better saver returns but could lead to unintended consequences of reducing competition, stifling innovation and potentially disadvantaging some minority groups," it stated.

"We also recommend that the transition pathway application process for schemes that have a main scale default arrangement that is less than £10bn in s28D needs to come into force as soon as possible to avoid further market disruption." 

In addition to this, it said that although it is supportive of the concept of default decumulation for DC schemes, changes are needed to make this section of the bill "fit for purpose".

In particular, the SPP said shifts are needed on trustee liability, equalities legislative requirements, data protection requirements, the transfer mechanism, catering for developments in the market, new terminology that does not have a clear and single meaning, and the interaction with members during their retirement.

Changes to the value for money proposals may also be needed, as the SPP said that parity between occupational and Financial Conduct Authority (FCA)-regulated schemes on value for money should be ensured.
 
In addition to this, the SPP echoed recent calls from Pensions UK, urging the government to use the bill as an opportunity to scrap the PPF Administration levy and transfer its remit to the PPF. 

SPP president, Sophia Singleton, said: "The SPP very much supports the Pension Schemes Bill and, as always, we are committed to assisting policymakers in delivering the best possible outcomes for the UK economy, industry and most importantly savers. 

"Our response to this call for evidence makes a number of constructive suggestions to help further improve the legislation whilst also making clear the strength of SPP’s opposition to the threat of mandation.”
 

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