PLSA AC 2020: Opperman expects further pensions bill in current parliament

Pensions Minister, Guy Opperman, has said that he expects there to be a further pensions bill in this parliament after the current Pension Schemes Bill becomes law.

When asked when the statutory regime for defined benefit (DB) superfunds would likely be legislated for at the PLSA Annual Conference 2020, Opperman stated: "I remain of the view that there will be a further pensions bill in this parliament.

The Pensions Minister said "one significant element of that future pensions bill would constitute to superfunds legislation", adding that a “properly authorised and regulated superfund sector” could “play an important role in the way forward”.

Opperman continued: “The interim DB superfund regime is clearly a good guide for the future but there is no guarantees that it will be the final product. We are working our way through that. I very much hope we will be proceeding with that relatively quickly. There was no way that I could have included the superfunds in this bill, the bill is already very substantial.

"Government has to come to a view on what the long-term regime looks like, working with regulators. Then has to draft the statutory process and then take it through parliament. That will take some time.

"It would be substantial, I don’t think there’s any doubt that we could do superfunds without it being a substantial piece of legislation. It’s not a two-clause bill."

Opperman added that the uncertainty caused by the coronavirus pandemic has provided "a stark reminder" that the future strength of employer covenants cannot be taken for granted.

"This is a policy problem that the current arrangements simply do not solve," he said.

“Without action there is a possibility that more pension schemes may face suffering a reduction in benefits following an insolvency event.

"At this difficult time, it is important now more than ever that the government develops new solutions for employers and schemes who cannot afford insurance buyouts now or in the foreseeable future. This is where I believe superfunds can help.”

As well as highlighting superfunds, Opperman said he wanted “to take stewardship forwards much more actively” in the new year as he called for the pensions industry to embrace a “new industrial revolution”.

Opperman argued that pension schemes would be able to play their part in a green revolution by investing in opportunities that arise and through more active stewardship of the firms they invest in.

The Pensions Minister warned that climate change was a risk “which has the potential to render some pension schemes and some pension saving valueless in the future”, adding that the risks associated with the matter had “the ability to wipe out swathes of the economy, far more effectively than the natural or even exceptional variation in interest rates or exchange rates”.

Opperman commented: “Climate change is both the defining feature of our time and also the defining issue potentially for pensions. I am certainly going to great efforts to ensure that our climate initiatives deliver a greener pension system.”

Detailing the government’s efforts to steer the industry towards adaptation to climate change, he said the “main step” that had been taken was the mandating of TCFD for larger schemes and authorised master trusts.

A consultation on this matter was launched in August and closed earlier in October, with Opperman calling the “vast majority” of the 92 responses “strongly positive” about the government’s intent.

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