King Charles unveiled the pension schemes bill in his speech at the state opening of parliament today (July 17) as Labour aims to put people's pots at the heart of its bid to drive UK investment.
During his speech the King said: “Bills will be brought forward to strengthen audit and corporate governance, alongside pension investment.”
Measures in the bill include poor performing default funds being cast under the spotlight as part of the value-for-money framework, the consolidation of small pension pots as well as occupational pension schemes being required to offer retirement income solutions to members under the plans.
In its election campaign, Labour had promised a full review of the UK pension landscape therefore many in the industry expected the King to skip any mention of a pensions bill.
However, former pensions minister and partner at LCP, Steve Webb, said the bill showed it was “business as usual” for Labour’s pension policy, as many measures echoed the work of the previous administration.
He said: “There appears to be nothing in the legislation that so far represents a distinctively ‘Labour party approach’ to pensions, and a Conservative minister could happily have brought forward this legislation.
“Perhaps inevitably, it will take time before we see how the new government’s agenda differs from that of its predecessor. But this does mean that any distinctive policies will have to await legislation later in this Parliament and may take time to have effect”.
Kirsty Anderson, retirement specialist at Quilter said the consolidation of defined contribution small pots in Labour’s legislative agenda, addressed a “crucial issue in modern retirement saving.”
“Our working habits have drastically changed over the last few decades. Previously, individuals might have had one or two jobs during their lifetime, resulting in one or two pensions. However, with the rise of auto-enrolment and more frequent job changes, people are now accumulating multiple small pension pots. This unintended consequence can complicate retirement saving and may even cost savers money.
“Labour is picking up the baton from the previous government, which had already consulted on this issue. It’s important to push ahead with this legislation to ensure the market works best for savers and it also helps to lay the groundwork for a shake-up to auto-enrolment,” she added.
Liz Field, chief executive of Pimfa, said the body was particularly focused on measures highlighted in the bill which would require all pension schemes to provide retirement solutions for savers when they retire.
She said: “While we are mostly supportive of this measure, it is imperative that it is implemented in a way which gives due consideration to enabling consumer choice and does not disincentive engagement.
“As DWP develops its thinking on this issue, we would urge them to consider what the impact of the ongoing advice guidance boundary review would be.”
According to Tom Selby, director of public policy at AJ Bell, one key thing missing from the bill was the mention of scaling up auto enrolment.
