A new version of the Pensions Bill has been published following completion of the committee
stage in the House of Lords. The report stage has been delayed until 7 October 2008.
The main reason for the delay is the proposed extension of the Pensions Regulator's powers
which was announced in April and summarised in a Pensions briefing. Clause 23 of the Bill
amends the regulation-making powers for the Secretary of State for Work and Pensions to
widen the Regulator's moral hazard powers. The Secretary of State may exercise this power
only if he considers that without the provision there would be:
- a material risk of adverse effects on the benefits under relevant pension schemes of, or in
respect of, members of such schemes, or
- a material risk of compensation from the PPF becoming payable.
It has now been announced that, following concerns raised during consultation that insufficient
detail will be included in primary legislation, the government will put forward more detailed
clauses over the summer and consult formally on draft regulations. The Pensions Regulator will
also issue guidance on how it will implement the new powers.
As for the remainder of the Bill – most of the clauses deal with personal accounts (Clauses 1 to
96). Clause 53 is the much-publicised provision preventing employers from offering financial
inducements to their employees to opt out of membership of workplace pension schemes after
the automatic enrolment requirements come into force in 2012; an employer will face a
compliance notice from the Pensions Regulator if it takes action for the "sole or main purpose"
of inducing an employee or worker to opt out of a personal accounts scheme or the employer's
Other provisions of the Bill include:
- the abolition of protected rights (likely to be in 2012);
- regulation-making powers for the government to extend the Financial Assistance Scheme
and extending the ban on purchasing annuities by schemes eligible for the FAS;
- provisions permitting the PPF to pay lump-sum compensation to terminally ill members;
- the correction of a legislative oversight to allow certain administrative and other payments to
be made to the employer; and finally
- a regulation-making power for the Secretary of State to amend existing primary legislation
for the purpose of consolidating legislation relating to private pensions (as originally
proposed in the 2002 pensions green paper); a consolidation bill is reportedly unlikely to be
brought forward before 2010.