Private Pensions

Thursday 25th April 2013 Written Statements

[The Minister of State, Department for Work and Pensions (Steve Webb)]

As part of the Government’s red tape challenge programme, the Department has undertaken a detailed examination of the regulatory framework for private pensions. This has been supported by input from the pensions industry, employers, consumer groups and the public. With the conclusion of this work, the Department can confirm a number of proposed changes to private pension regulation, as well as areas where further work will be undertaken.

In particular we are proposing:

a simplification, consolidation and future-proofing of the regulations that deal with disclosure of information by pension schemes. This was a key request in the representations we received from stakeholders during the red tape challenge process and we have since published a consultation proposing improvements. We estimate net savings to business of £10 million per year, subject to the consultation response. We have also asked in the consultation whether respondents would welcome a move to a more principles-based approach to the disclosure regulations.

a new statutory objective for the Pensions Regulator to support scheme funding arrangements that are compatible with sustainable growth for the sponsoring employer and fully consistent with the 2004 funding legislation.

continuing to examine whether to make indexation for future accruals discretionary as part of our ongoing work to encourage more risk-sharing in pensions, through “defined ambition” pensions.

further work to consider how the current processes relating to employer debt that cause difficulties for charities and others participating in multi-employer schemes could be improved.

amendments to the regulations setting out the treatment of pension rights on bankruptcy to ensure compliance with EU treaty obligations.

a series of minor improvements and revocations of statutory instruments relating to the operation of the Pension Protection Fund, financial assistance scheme and the Pensions Regulator.

In coming to these conclusions through the red tape challenge process, we have sought to balance a reduction in burdens with the need to protect accrued rights and keeping an appropriate level of consumer protection. Broadly speaking, we feel the current regulatory framework strikes the right balance, though as can be seen from our proposals, there are some areas for improvement and further consideration.

In addition, we are proposing to make technical changes to improve the automatic enrolment process for employers, pension and payroll providers. We are currently consulting on proposals and expect to bring changes into force by April 2014.

We are grateful for those who have contributed to the debate around the regulatory regime for pensions and will continue to explore areas where we might be able to ease burdens without reducing member protection. In particular, as outlined in our recent reinvigoration strategy, we are carefully considering the future regulatory framework for private pensions as part of our work to enable greater risk-sharing and the development of defined ambition pensions.