Pension Schemes Bill passes latest stage on road to becoming law

The Pension Schemes Bill passed the report stage and third reading in the House of Commons yesterday (16 November).

It will now proceed back to the House of Lords for their consideration of amendments made by the Commons.

If the Lords agree to the amendments and wording of the bill it can receive royal assent and become law.

However, if the Lords disagrees with any Commons amendments, or makes alternative proposals, it will be sent back to the Commons and can ‘ping pong’ between the houses until they reach an agreement.

The bill sets out the framework for the introduction of pensions dashboards and collective defined contribution (CDC) schemes, expands The Pensions Regulator’s (TPR’s) powers, and requires schemes to adopt and report against the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD).

Several proposed amendments to the bill were voted down during the reading, including a Labour amendment to commit all occupational schemes to become net zero by 2050, an amendment for the mandatory scheduling of Pension Wise appointments and an amendment that would have required TPR to treat open defined benefit (DB) schemes differently to closed DB schemes.

“It seems the government has taken the view that perfect is the enemy of good when it comes to pension reform, with the voting down of a number of proposed amendments in the House of Commons last night,” said Interactive Investor head of pensions and savings, Becky O’Connor.

“Some of the amendments could have raised the bar uncomfortably high for some in the industry. For instance, the proposed Labour amendment to commit all occupational pension schemes to become ‘net zero’ by 2050, which was defeated.

“Safer, better, greener is the government’s catchphrase for this bill. The measures it contains will be strides in the right direction, if not a guarantee just yet of pensions being the safest, best and greenest they can be.”

Aegon pensions director, Steven Cameron, added: “The Pension Schemes Bill is one step closer to being enacted after completing its report stage and third reading in the Commons.

"We’re pleased that the Pensions Minister continues to champion a range of pension dashboards offered by different entities alongside the Maps dashboard. We agree this will allow individuals to choose the dashboard most convenient for them, which may be linked to their current pension provider or scheme. We also support avoiding adding to the complexity of dashboards content or functionality at this stage – let’s get them up and running first.

“The role of guidance has been one of the contentious points in the bill’s journey. As individuals take more and more responsibility for their own retirement plans, it’s critical they have access to the support they need, when they need it. Guidance from Pension Wise is an important part of this and should be encouraged. This needs to sit within a wider framework of information, prompts and support from pension schemes and providers and crucially professional financial advice for those who need it.

“On climate change, there’s a careful balance to be struck between encouraging responsible investment without overstepping the mark and impinging on trustees responsibilities to act in the best interest of members.

“Those who support collective defined contribution schemes will be pleased these are also one step closer. However, a huge amount needs to be done to make sure these are fair, safe and understood by future members, not just of the Royal Mail scheme but of any others which may be put in place.”

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