There were no surprises for the pensions industry in the Queen’s Speech 2021, no doubt a relief for many.
For the public sector, the Government plans to act on the McCloud and Sargeant judgment. The new law will need to deal with the age discrimination found by the Court in the transitional measures brought in when career average pensions were introduced in 2015. For a remedy period lasting until April 2022, the proposal is that affected members will be able to choose between benefits. There will also be changes to judicial retirement age.
Pensions assets will also be brought into the dormant assets programme, as announced in January. This does not include occupational pensions, and may exclude group personal pensions used for auto enrolment.
On the investment side, there is a continued focus on investment in UK infrastructure with both public and private funds.
Separately, the Finance Bill introduced after the Budget in March will confirm the freezing of the lifetime allowance and sets out the tax position for collective money purchase scheme benefits.
For an industry already dealing with and preparing for a great deal of legal and regulatory change:
- significant new regulatory powers and associated reporting duties
- pensions dashboards
- a new funding code and long term funding strategy
- a combined code of practice from the Pensions Regulator
- further investment reporting obligations, including on climate change
- changes to transfer rights
- the introduction of collective money purchase schemes
- the expected introduction of DB superfunds
- GMP equalisation, and
- the Adams judgment on the scope of SIPP provider duties,
a relatively low key year for Acts of Parliament is broadly welcome. Schemes, pensions providers, employers and their advisers will still need to digest and, in many cases, act on significant volumes of regulations and regulatory material relating to the list above.
What was left out?
That said, we would have welcomed a bill to clarify GMP conversion legislation and tax consequences.
There are also a number of areas of contracting-out and tax legislation that it would be helpful to update or clarify (for example around fixed protection and ‘buy-out’, and schemes wishing to ‘buy out’ post-97 contracted-out rights where the whole scheme is not winding up).
Finally, further reform or clarification of employer debt law (section 75) could be very helpful, particularly for frozen schemes, but we’ve been saying that for a long time now!