Pension Schemes Bill to receive Royal Assent

The Pension Schemes Bill will receive Royal Assent and become law following a final parliamentary debate on amendments in the House of Lords.

Debate centred on the final House of Commons’ amendments and amendments from the House of Lords that were rejected, with the Lords agreeing with the Commons’ decisions and wording.

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).

Once the bill receives Royal Assent, it will become the Pension Schemes Act 2021.

Despite its passage through parliament, LCP noted that "large sections" of the bill will not come into force for "many months" and key provisions on pension scheme funding may not be implemented until 2022.

LCP's analysis stated that further regulations were needed on CDC schemes, dashboards, climate change governance, regulatory powers, defined benefit (DB) scheme funding and pension transfers.

“Although this feels like the end of a long journey, in reality it is more like half-time," commented LCP partner and head of research, David Everett.

"To put a new Act of Parliament into effect requires a large amount of secondary legislation, codes of practice and guidance and this needs time to be drafted, consulted on and implemented.

"We expect to see a phased implementation of the new Pension Schemes Act, with the scheme funding powers almost certainly not biting until well into 2022.

"There will be much for the pensions industry to do in terms of engaging with this process to make sure that everything is fit for purpose”.

The bill passed the report stage and third reading in the House of Commons on 16 November 2020, with several proposed amendments, including committing schemes to net-zero carbon emissions by 2050 and mandatory Pension Wise appointments, being voted down by the Commons.

Pensions Minister, Guy Opperman, has said that he expects there to be a further pensions bill in the current parliament, which would include DB pension superfund legislation.

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