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A Brief Overview - Pension Schemes [Lords] Bill 2019-2021

The Pension Schemes [Lords] Bill 2019–21 was introduced to the House of Commons on 16 July 2020. The Second reading was held on 7 October 2020. The next stage is the sitting of the Public Bill Committee, which will take place on Tuesday 3rd November. The Committee is due to report by Thursday 5th November. There will be no oral evidence sessions. The Third Reading will then take place before the Bill goes to the House of Lords.

Below is a very brief overview of what the Bill intends to achieve:

Risk Sharing - Collective Money Purchase Schemes
The first two parts focus on the introduction of Collective Money Purchase Schemes (CMPS), otherwise known as Collective Defined Contribution (CDC) Schemes. These schemes would share any risk between members collectively, as opposed to with the sponsoring employer in a Defined Benefit (DB) Scheme, or with the individual member in a Defined Contribution (DC) Scheme. The new type of scheme would receive contributions from both the employer and employee into a ‘collective’ fund. The employee would then drawn an income from this collective fund at retirement.

A Show of Strength - The Pensions Regulator
The Bill sets out to strengthen the powers of The Pensions Regulator. It is hoped that this will help prevent pension scams by introducing a number of measures including: three new criminal offences and power to issue civil penalties up to £1million, and extending information gathering powers.

What’s in your Pot - Pensions Dashboards
There has been a lot of pensions press about the ‘Pensions Dashboards’ – the creation of digital interfaces where information about all the pension pots one person holds can be seen in one place. It is hoped that the way the information is presented gives the individual an easy and understandable way to view their pots and use this information to make more informed decisions about their retirement plans.

Further Provisions
The Bill includes further provisions to help protect pension savers including: regulations to help trustees of occupational pension schemes ensure transfers are made to safe, non-fraudulent, schemes by way of stipulating conditions a person will need to meet to have a statutory right to transfer their pension savings into another scheme (Clause 125); and ensuring that the Pension Protection Fund (PPF) can continue to administer the compensation scheme as intended following court rulings (Clause 126).

We will keep Members up to date with the Bill’s progression.

In the meantime, you can keep a track on the Government’s website: https://services.parliament.uk/Bills/2019-21/pensionschemes.html

[Sources: https://publications.parliament.uk/pa/bills/cbill/58-01/0165/en/200165en.pdf. https://www.parliament.uk/business/news/2020/october/have-your-say-on-the-pension-schemes-lords-bill/]