It could take up to two years before a pensions bill comes into effect, starting after the result of the upcoming consultation paper is published, TPR has said.
Speaking at a panel discussion on DB consolidation at the Pensions and Lifetime Savings Association (PLSA) annual conference in Liverpool, TPR executive director for regulatory policy, analysis and advice David Fairs discussed the Pensions Minister’s statement that a pensions legislation is due next summer.
He said: “The minister also talked about a consultation paper and I think that will set out some of the benefits of consolidation but also some of the challenges. As he said, he is hoping for a pensions bill, but realistically it’s going to be two years before that bill comes into effect. So if the consultation paper creates the need for legislations, it’s going to be two years before that’s impacted.”
The consolidation paper is not happening in isolation, Fairs noted. The regulator is also looking at the funding code starting this week, going out for consultation in the spring and with a draft code expected next autumn, affecting all DB schemes.
“We are not looking to take away completely the flexibilities under the funding code but we will be very clear on what we mean by prudent and appropriate.”
Fairs also said that TPR is very supportive of DB consolidators. “But we have to recognise that there are some new challenges and some new risks alongside those,” he explained, mentioning that consolidators being set up now under the current regime will have to be kept an eye on.
“Really what we are looking for is member detriment, are members actually going to be no worse off than they were previously. I think that is a challenge for trustees and we’ll look at the decision process for trustees.
“Clearly they could carry on as they are, they could move to a DB master trust, they could move to a commercial consolidator or they could die out. So the rationale of why they reach that decision is interesting,” he added.
Newly set up consolidator Clara Pensions’ CEO Adam Saron said that it is worth remembering that consolidation is not something new as it already exists in many forms.
He said: “The Pension Protection Fund is definitely a consolidator, the purpose is purely social, it’s true to say that they are the fund with the superpowers. The insurance [companies] too, they are a consolidator of pension liabilities, I don’t think it’s unfair to say they are commercial consolidators.”