Game changer Pension Schemes Bill set to get Royal Assent

Opening the door to wide-reaching changes ranging from DB surplus and superfunds through to DC value for money (“VFM”), automatic consolidation, “megafunds” and new retirement solutions, the Pension Schemes Bill is set to receive Royal Assent today.

Commenting on the changes, David Saunders, senior partner, says: “Paving the way for a radical reshaping of the pensions market, and with the end of the Parliamentary session looming, the Pension Schemes Bill has gone down to the wire.”

“The first major development out of the blocks will be the Virgin Media remedy, designed to address the industry uncertainty resulting from that case. Taking effect immediately to coincide with Royal Assent, it will be interesting to see how its use evolves in the months ahead. But with much detail still to follow in regulations, many of the new legislation’s other key provisions will be a relatively slow burn in comparison.”

“Having bounced back and forth between the House of Commons and House of Lords for the last couple of weeks or so, the drafting of the so-called “mandation power” threatened to derail the Bill altogether. This new power will allow the Government to set quantitative target asset allocations for certain schemes’ default funds if the industry fails to achieve certain goals of its own accord. If used, the mandation power will override trustees’ investment duties. Whilst regarded as a measure of last resort, its controversial nature resulted in much political jostling between the two Parliamentary Houses. The upshot is that some key concessions were secured, including that the power can only be used once and will fall away entirely if not used by the end of 2032.”