Pension funds will be given space to strike a balance between long-term liabilities and assets and a new "flexible" pensions regulator is being introduced, according to the Pensions Bill just released by the DWP.
That said, only sketchy details were first released this morning by Andrew Smith MP, secretary of State for Work and Pensions, as information obtained by IFAonline suggested "an administrative error" by the DWP will delay the Bill's full paper publication by several days.
However, what those changes are has yet to be identified as only a handful of MPs have so far seen a paper-based version of the Bill.
The Stationary Office says it has not yet officially been asked by the government to print "Bill no.57", so specific detail may not be available until next week once approval to print has finally been given.
Information so far released by the DWP says introduction of a new pensions regulator should make it easier for businesses to "get on with running good pension schemes", as the regulator will focus on underfunding, fraud, maladministration and late payments but minimise interference with well-run schemes.
"The Pensions Bill sets out proposals for a new Pensions Regulator to give better protection to members of work-based pension schemes and to reduce the compliance burden on well-run schemes," says Andrew Smith, secretary of State for Work and Pensions.
"It will focus on protecting the benefits of pension scheme members, concentrating its effort on schemes where it assesses that there is a high risk of fraud, bad governance or poor administration. The Pensions Regulator will have important new powers to tackle under-funding.
"The Regulator will not overburden employers who provide pension schemes, enabling well-administered and funded schemes the freedom to continue supporting their schemes without being subject to constant, intrusive and burdensome regulation," he adds.
Simplification rules currently under consultation by the DWP should also free pension trustees – who are expected to have knowledge of the issues they face – from the amount of red tape and regulatory administration currently experienced, so they can apply their own characteristics or requirements to the funding and asset management requirements on a ongoing basis.
Along with introduction of the long-awaited Pension Protection Fund – designed to provide some form of financial security for pension scheme members where the employer goes bust – additional changes also reveal the Department for Work and Pensions has changed the rules on limited price indexation.
This means pension schemes will only be required to index pension benefit payment increases by 2.5% a year for the period of the member’s life, rather than the 5% currently required, in a bid to limit the funding liabilities pension schemes face.
Overpayment of pension benefits will also be recouped from future payments, says the DWP, while a mechanism for resolving disputes between scheme trustees and members is being launched, along with a Pension Protector Fund Ombudsman to manage cases where employers are in liquidation.
State retirement age will remain set at 65, says the DWP, but those who defer taking benefits until a later date will have the option of taking a lump sum.
Other measures designed to safeguard member benefits include accrual of pension rights during paid statutory paternity and adoption leave, the calculations which can be used to revalue these accruals, as well as further data on definitions relating to stakeholder pensions.
The government also has plans to "regularise" payments of certain UK benefits, such as pensions, Widow’s Benefit and Bereavement Benefits for those people who have protected National Insurance contributions but held Australian residence for a time.
This is all accompanied by proposals detailed last week as part of the Informed Choice proposals, which will require employers provide access to information and advice in the workplace, as well as make it compulsory for employers to provide combined pension forecasts.
Data concerning pension membership will also be opened to sharing between the DWP and other government bodies, says the statement, to allow department analysts to use private pensions data for policy modelling and development. >
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