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The Government
has tabled amendments to the Pensions Bill which would introduce
further protection of pension scheme members’ benefits.
The Government intends to modify the Pensions Regulator’s
(TPR) powers to ‘an evolving pensions market’, with
its main focus on the emergence of new alternatives to buy-outs.
The Government is concerned that these can reduce the security provided
by the employer who is responsible for the backing of the scheme,
therefore putting benefits at risk. There is also concern that this
would place extra costing pressure on the Pension Protection Fund
(PPF) and those responsible for paying its levy.
“By introducing proportionate powers, which are carefully
targeted, we can secure a healthy and innovative pensions industry
and security for pension scheme members who have worked hard and
saved for retirement,” said new Pensions Minister, Rosie Winterton.
“We’ve listened carefully to stakeholders and, following
further work with interested parties over the summer, we have framed
these new powers so that they do not have an undue impact on legitimate
business activity. To provide the certainty and clarity the industry
needs we have tabled amendments that put the changes onto the face
of the Pensions Bill.”
She added that among these safeguards is a statutory Code of Practice,
aimed to “guide application of the new material detriment
test for contribution notices.”
This safeguard gives TPR the power to require a contribution to
the pension scheme if members’ benefits are put at risk by
a sponsoring employer’s actions or failures.
The amendments are expected to have retrospective effect from 14
April 2008, which was the date on which the Minister announced the
intention to legislate.
It is anticipated that the legislation will come into force at Royal
Assent of the Pensions Bill, except for the new material detriment
test which will take effect when the Code comes into force.
The Government’s response to the consultation exercise and
its April 2008 consultation document are available here.
- Pensions Age
October 2008
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