PSB could stop schemes acting in members' interests, warns PLSA

The Pension Schemes Bill must be amended in order to avoid unintentionally preventing schemes from acting in members’ best interests, according to the Pensions and Lifetime Savings Association (PLSA).

As part of its written submission to the Public Bill Committee inquiry on the Pension Schemes Bill, the organisation argued that the wording of section 107 of the legislation would “unintentionally criminalise ordinary business activities” and could therefore have unintended negative consequences for pension schemes and pension savers.

It warned that the measures could prevent legitimate actions to make pension benefits more secure and discourage trustees from taking part in pension scheme governance, calling for the measures to instead be specifically focussed on employers and high-level associates of pension schemes.

The PLSA added that it supported enhancing The Pensions Regulator’s (TPR) powers to deal with “reckless” employer behaviour, though in this case it recommended “narrowing the scope” of proposed new powers for the regulator.

PLSA director of policy & research, Nigel Peaple, said: “We welcome measures to prevent scheme sponsors from deliberately evading their responsibilities but the current drafting of section 107 casts the net far too wide and well beyond the intended targets.

"This is a significant issue which many of our members have raised concerns about.”

Section 107 has been singled out for criticism by others too, with Pinsent Masons partner, head of pensions and long-term savings, Carolyn Saunders, warning that the measures would serve to make professionals in the pensions industry “very nervous” about taking action when an employer is struggling.

The PLSA also argued that new amendments in the bill regarding pension dashboards could place people at risk of losing their life savings if they fall prey to pension scammers or mis-selling.

The organisation has argued that these amendments would allow dashboards to be used to provide transactional services and remove a one-year bedding in period, and would fail to ensure that the first pensions dashboard would be a single, non-commercial product hosted by the Money and Pensions Service (MAPS).

The organisation also expressed disappointment that the bill had not paved the way for extending the scope of automatic enrolment to younger savers, or establishing a new regulatory framework to assist schemes in supporting their members as they approach and make their retirement decisions.

Peaple said: “It is also disappointing that this bill has not yet scheduled the planned mid-2020s removal of the lower earnings limit to automatic enrolment contributions and lowering the enrolment age from 22 to 18 years of age, meaning millions missing out on extra saving with employer support and tax relief.”

He added: “Workplace pensions provide an essential retirement income for millions of people, so it is vitally important the £2 trillion pensions sector has legislative clarity.

“The Pension Schemes Bill does many useful things, such as strengthening the powers of TPR to protect members, creating pension dashboards, and enhancing the transfer regime to protect savers against pension scams.

"These measures will help more people have a better income in retirement.”

    Share Story:

Recent Stories

Sustainable investing for DC schemes
Laura Blows discusses sustainable investing for defined contribution plans with BlackRock head of UK & MEA global consultant relations, Claire Felgate, in Pensions Age’s latest video interview

Spotlight on Emerging Markets
Francesca Fabrizi talks emerging markets with Polar Capital’s head of Emerging Markets & Asia, Jorry Nøddekær, exploring the opportunities for pension funds in the current global setting

The latest in multi-asset credit
Laura Blows discusses the high-yield market and multi asset credit with Royal London Asset Management senior fund manager, Khuram Sharih
Pension portfolios – the role of asset-backed securities
Laura Blows is joined by Royal London Asset Management (RLAM) head of sterling credit research, Martin Foden, and its Senior Fund Manager, Shalin Shah to discuss the role of asset-backed securities (ABS) within pension fund portfolios