The pensions industry has expressed its surprise at the inclusion of a new Pension Schemes Bill in the King’s Speech, with many praising the government for bringing forward existing policy initiatives so quickly.

The bill included a continuation of several areas of pension policy from the previous government, including tackling the number of small pots, plans for defined benefit (DB) superfunds, and bringing forward the value for money (VFM) framework.

It also included proposals on the requirement for trust-based schemes to offer retirement income solutions for members and reforms to The Pensions Ombudsman to reaffirm the body as a ‘competent court’.

“With so much of Labour’s pre-election talk centring on their desire to complete a full review of the UK’s pensions landscape, we had expected the new government to skip the inclusion of a Pensions Bill in today’s King’s Speech,” commented Aegon head of pensions, Kate Smith.

“To our surprise, that’s exactly what we ended up getting. The new Pensions Schemes Bill looks like a sign of continuity, adopting many pensions policies already in motion from the previous government.

“Labour will be moving fast to make this happen, improving saver outcomes and supporting investments by enabling schemes to invest in a wider range of assets.”

Pensions and Lifetime Savings Association (PLSA) director of policy & advocacy, Nigel Peaple, said the association was pleased to see a Pension Schemes Bill in the King’s Speech.

“No time has been wasted in bringing forward existing regulatory initiatives that already have the backing of industry and will improve the retirement outcomes of savers,” he continued.

"Particularly welcome are the measures to require schemes to offer decumulation solutions, and the creation of DB superfunds – both key recommendations of the PLSA. It’s good to see a way forward for small pots and the value for money framework being prioritised too.

"The National Wealth Fund Bill should also provide pension schemes with a viable vehicle to invest in exciting growth areas.”

TPT Retirement Solutions chief executive, David Lane, said that the inclusion of the Pension Schemes Bill was encouraging and will allow the government to quickly implement the changes required once it has completed its pensions review, which “hopefully” will happen soon.

However, while Lane said that encouraging more productive investment in the UK might be welcomed by trustees, he warned the government not to force trustees to invest at the expense of their fiduciary duty.

While many praised the measures in the bill, AJ Bell director of public policy, Tom Selby, said the claim they could deliver bigger pensions needed to be “taken with a pinch of salt”.

“It is, of course, possible that this package of reforms will result in better investment returns for members – but this is never guaranteed,” he continued.

“Investing in private equity, in particular, can come with significant costs and risks, so it is crucial trustees choosing to move in this direction are focused on delivering good retirement outcomes above all else.

“Savers rightly expect to receive good value for money from their schemes, so the emphasis on fund performance – in particular the difference between the best and worst performing default funds – effectively puts the worst performers on notice that they need to up their game.”

Broadstone head of market engagement, Simon Kew, concluded that while the bill was a surprise inclusion, it largely continued the direction of travel from the previous government in various areas.

“The problem of small pots is likely to take years to solve so it is good to see that there is an urgent desire to fix this issue,” he said.

“While there is a mention of commercial superfunds, which have already completed their inaugural deals, the public sector consolidator idea is conspicuous by its absence.

“The bill also contains measures for the trustees of pension schemes to offer savers retirement products so they have a pension and not just a savings pot when they stop work which can help drive up engagement. The challenge of retirement income from defined contribution funds is massive and adding some paternalism back into the system seems to be the only way forward.

“The legislative direction of travel outlined in the King’s Speech is understandable as a smaller number of larger pension schemes brings efficiencies for providers, investment opportunities for the government and easements for regulators. The hope is that the combination of these will lead to better outcomes for members while these goals clearly remain consistent with the terms of any deeper review of financial services and pensions.

“It may clear the way for the wide-ranging pensions review to tax reliefs, the state pension and advice/guidance – all areas which could benefit with from longer and considered consultations.”

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