With this it will be convenient to discuss the following:
New clause 2—Pensions Advisory Commission—
“(1) The Pensions Regulator shall establish a committee to be known as the Pensions Advisory Commission.
(2) The Commission shall consist of—
(a) members of the Regulator as provided under section 2(1) of the Pensions Act 2004, and
(b) five other persons appointed by Her Majesty on the recommendation of the Secretary of State.
(3) A person appointed under subsection (2)(b) shall exercise only functions in pursuance of the duties in subsections (5) and (6).
(4) The Commission shall be chaired by a person appointed under subsection (2)(b).
(5) It shall be the duty of the Pensions Advisory Commission to submit to the Secretary of State each calendar year, beginning with the year 2022, a report setting out the Commission’s views on—
(a) the impact of provisions in Parts 1, 2 and 4 of this Act on—
(i) persons in different parts and regions of the United Kingdom,
(ii) equal treatment of men and women in access to pension provision, and
(iii) persons with a protected characteristic under section 4 of the Equality Act 2010; and
(b) the effectiveness of the powers in Parts 1 to 3 of this Act in enabling the Pensions Regulator to achieve its objectives under section 5 of the Pensions Act 2004.
(6) It shall also be the duty of the Commission to report to the Secretary of State by 31 October 2021 its views on when commercial operators should be able to enter the market for provision of a pensions dashboard service.
(7) The Secretary of State must lay before Parliament a copy of every report received from the Commission under this section.”
New clause 3—Pension accounts—
“(1) A jobholder to whom section 3 of the Pensions Act 2008 applies may by notice require an employer to arrange for the jobholder to receive into a pension account any contribution which would otherwise be made by the employer into an automatic enrolment scheme.
(2) A contribution by a jobholder or by their employer into the jobholder’s pension account shall be invested in a pension scheme offered by an approved pension provider.
(3) The Secretary of State may by regulations make provision—
(a) about the form and content of a notice given under subsection (1), or
(b) about the arrangements that the employer is required to make.
(4) The Secretary of State may make regulations to set criteria by which a pension provider may be approved for the purposes of subsection (2).
(5) Regulations under this section shall be made by statutory instrument and may not be made unless a draft of the instrument has been laid before and approved by a resolution of each House of Parliament.”
New clause 4—Employer debt: trustees’ discretion—
“(1) The following changes are made to the Occupational Pension Schemes (Employer Debt) Regulations 2005 (SI 2005/678).
(2) In regulation 2, in the definition of “scheme apportionment arrangement”—
(a) in sub-paragraph (f)(ii), after “apply”, insert “but not if the circumstances in paragraph (h) apply”;
(b) at end insert—
“(h) the consent of the remaining employer or employers shall not be required under (f)(ii) above where all of the following conditions apply—
(i) the departing employer’s debt was treated as becoming due prior to the coming into force of this provision; and
(ii) the departing employer’s debt was less than 0.5% of the scheme’s overall liabilities, as estimated by the trustees or managers on advice of the scheme actuary, as if the whole scheme had been winding-up at the time the debt was treated as becoming due; and
(iii) the employer in question was operating as an unincorporated business during his participation in the scheme; and
(iv) the trustees or managers consider that, in the context of the scheme overall, taking into account factors such as the scheme’s assets, liabilities and the trustees’ or managers’ most recent assessment of the overall employer covenant, there would be no material benefit to the scheme and its members in seeking recovery of the employer’s liability share from the departing employer.”
(3) In regulation 9, after paragraph (14B), insert the following new paragraph—
“(14C) Condition L is that a debt was treated as becoming due from him under section 75 of the 1995 Act but is excluded under this Condition because—
(a) the employer’s debt was treated as becoming due prior to this Condition coming into force; and
(b) the employer’s debt was less than 0.5% of the scheme’s overall liabilities, as estimated by the trustees or managers on advice of the scheme actuary, as if the whole scheme had been winding-up at the time the debt was treated as becoming due; and
(c) the employer in question was operating as an unincorporated business during his participation in the scheme; and
(d) at or before the applicable time, the trustees or managers have made a determination not to pursue the debt on the grounds that, in the context of the scheme overall, taking into account factors such as the scheme’s assets, liabilities and the trustees’ or managers’ most recent assessment of the overall employer covenant, seeking recovery represented a disproportionate cost to the scheme and would be of no material benefit to the scheme overall.””
This new clause would enable pension scheme trustees to exercise discretion not to pursue employer debt following an employer’s exit from a pension scheme where such debt is below a de minimis threshold. This aims to support unincorporated employers who are now retired for business and for whom the current regulation allows no easements.
New clause 5—Employer debt: deferred debt arrangement—
“(1) The following changes are made to the Occupational Pension Schemes (Employer Debt) Regulations 2005 (SI 2005/678).
(2) In regulation 6F—
(a) in paragraph (1), leave out “A” and insert “Subject to the provisions of paragraph (8) below, a”;
(b) at end insert—
“(8) In relation to a frozen scheme, the trustees or managers of the scheme may agree to a deferred debt arrangement where the employment-cessation event occurred at a time prior to the scheme becoming a frozen scheme, providing the conditions of paragraph (3) are met at the time the deferred debt arrangement is entered into.””
This new clause would permit employers in a pension scheme closed to future accrual to apply for a deferred debt arrangement, providing they meet the other statutory tests. This aims to support employers who are still trading but were not able to use the existing deferred debt easement.
New clause 6—Regulation of pension superfunds—
“(1) The Secretary of State shall publish a statement on proposals for primary legislation in relation to a duty on the Pensions Regulator to regulate pension superfunds.
(2) For the purposes of this section, a pension superfund is a defined benefit pension scheme that allows for the severance of an employer’s liability towards a defined benefit scheme and one of the following conditions applies—
(a) the scheme employer is replaced by a special purpose vehicle (SPV) employer, or
(b) the liability of the employer to fund the scheme’s liabilities is replaced by an employer backed with a capital injection to a capital buffer.
(3) The statement under subsection (1) shall be laid before Parliament before the end of a period of six months from the day on which this Act receives Royal Assent.”
This new clause would require the Secretary of State to publish within six months of Royal Assent proposals for primary legislation to place a duty on the Pensions Regulator to regulate pension superfunds.
Amendment 15, in clause 118, page 104, line 19, at end insert—
“(3) Requirements prescribed under subsection (2) must include a requirement that a pensions dashboard service may not include a facility for engaging in financial transaction activities.”
This amendment ensures that a pensions dashboard does not include a provision for financial transaction activities.
Amendment 9, page 105, line 20, at end insert—
“(6A) A requirement under subsection (6)(d) may require the provider of a pensions dashboard service to ensure that the needs of people in vulnerable circumstances, including but not exclusively—
(a) persons who suffer long-term sickness or disability,
(b) carers,
(c) persons on low incomes, and
(d) recipients of benefits,
are met and that resources are allocated in such a way as to allow specially trained advisers and guidance to be made available to them.”
This amendment would require that specially trained advisers and guidance are made available to people in vulnerable circumstances and would provide an indicative list of what vulnerable circumstances should include.
Amendment 10, page 105, line 20, at end insert—
“(6A) A requirement under subsection (6)(d) may require the provider of a pensions dashboard service to communicate to an individual using the dashboard the difference between—
(a) provision of information,
(b) provision of guidance, and
(c) provision of advice.”
This amendment would require the provider of a pensions dashboard service to ensure that users are made aware of the differences between “information”, “guidance” and “advice”.
Amendment 11, in clause 119, page 108, line 18, after “scheme,” insert—
“(iva) the total cost of charges incurred for the administration of the scheme”.
This amendment would add information about the total cost of charges incurred for the administration and management of occupational pension schemes to the list of information displayed on the dashboard.
Amendment 13, in clause 121, page 112, line 42, after “scheme,” insert—
“(iva) the total cost of charges incurred for the administration of the scheme”.
This amendment would add information about the total cost of charges incurred for the administration and management of personal and stakeholder pension schemes to the list of information displayed on the dashboard.
Amendment 8, in clause 122, page 116, line 37, at end insert—
“(2A) Before any other pension dashboard services can qualify under section 238A of the Pensions Act 2004 (qualifying pensions dashboard service)—
(a) the pensions dashboard service under subsection (1) must have been established for at least one year, and
(b) the Secretary of State must lay before Parliament a report on the operation and effectiveness of the pensions dashboard service under subsection (1) in its first year.”
Amendment 14, page 116, line 37, at end insert—
“(3) Before any other pension dashboard services can qualify under section238A of the Pensions Act 2004 (qualifying pensions dashboard service) the Secretary of State must lay before Parliament a report on the operation and effectiveness of the pensions dashboard service, including the adequacy of consumer protections.”
This amendment would require the Secretary of State to report on the operation and effectiveness of the public dashboard service (including consumer protections) before allowing commercial dashboards to operate.
Amendment 7, in clause 123, page 117, line 34, at end insert—
“(2) In exercising any powers to make regulations, or otherwise to prescribe any matter or principle, under Part 3 of the Pensions Act 2004 (scheme funding) as amended by Schedule 10, the objectives of the Secretary of State must include ensuring that schemes that are expected to remain open to new members, either indefinitely or for a significant period of time, can adopt funding and investment strategies which are suited to the characteristics of such schemes.”
Amendment 1, page 117, line 34, at end insert—
“(2) In exercising any powers to make regulations, or otherwise to prescribe any matter or principle, under Part 3 of the Pensions Act 2004 (scheme funding) as amended by Schedule 10, the Secretary of State must ensure that—
(a) schemes that are expected to remain open to new members, either indefinitely or for a significant period of time, are treated differently from schemes that are not;
(b) scheme liquidity is balanced with scheme maturity;
(c) there is a correlation between appropriate investment risk and scheme maturity;
(d) affordability of contributions to employers is maintained;
(e) affordability of contributions to members is maintained;
(f) the closure of schemes that are expected to remain open to new members, either indefinitely or for a significant period of time, is not accelerated; and
(g) trustees retain sufficient discretion to be able to comply with their duty to act in the best interests of their beneficiaries.”
This amendment seeks to ensure that open and active schemes which are receiving regular, significant cash contributions and closed schemes are treated differently, in accordance with their differing liquidity profile.
Amendment 6, page 117, line 34, at end insert—
“(2) The Secretary of State must, on or before 30 June 2021, lay before Parliament a comprehensive impact assessment of the effect on the charitable sector of changes to defined benefit schemes made under Schedule 10.”
This amendment would require the Government to produce an economic impact assessment of the changes to defined benefit schemes upon the charitable sector.
Amendment 16, in clause 124, page 118, line 45, leave out subsection (8) and insert—
“(8) In this section and in sections 41AA, 41B and 41C—
(a) “the Paris Agreement goal” means the objectives set out in Articles 2 and 4.1 of the agreement done at Paris on 12 December 2015; and
(b) “other climate change goal” means any climate change goal approved by the Secretary of State, but does not apply to a climate change goal which fails to meet the objectives of the Paris Agreement goal.
41AA Alignment with the Paris Agreement goal
(1) Trustees or managers of occupational pension schemes of a prescribed description must develop, set and implement, and from time to time review and if necessary revise, a strategy for ensuring that their investment policy, objectives and practices (including stewardship activities) are aligned with the Paris Agreement goal or other climate change goal.
(2) Such a strategy is to be known as a “Paris-alignment strategy”.
(3) The objective of a Paris-alignment strategy must be to achieve net-zero greenhouse gas emissions by 2050 or sooner, consistent with the Paris Agreement goal or other climate change goal.
(4) Provision may be made by regulations—
(a) requiring the trustees or managers of a scheme, in determining or revising a Paris-alignment strategy, to take into account prescribed matters and follow prescribed principles—
(i) as to the level of detail required in a Paris-alignment strategy; and
(ii) as to the period within which a Paris-alignment strategy must be developed, set and effected;
(b) requiring annual reporting on the implementation of the Paris-alignment strategy and progress against the objective set out in subsection (3); and
(c) requiring a Paris-alignment strategy to be reviewed, and if necessary revised, at such intervals and on such occasions as may be prescribed.”
This amendment enables regulations that would mandate occupational pension schemes to develop a strategy for ensuring that their investments and stewardship activities are aligning with the Paris agreement goals, and include an objective of achieving net-zero greenhouse gas emissions by 2050 or sooner.
Amendment 17, page 119, line 7, after “scheme” insert
“and alignment with achieving the objectives of the Paris Agreement goal or other climate change goal”.
This amendment is consequent on Amendment 16.
Amendment 18, page 119, line 8, leave out “section 41A” and insert “sections 41A and 41AA”.
This amendment is consequent on Amendment 16.
Amendment 19, page 119, line 19, after “41A”, insert “, 41AA”.
This amendment is consequent on Amendment 16.
Amendment 20, page 119, line 21, after “41A”, insert “, 41AA”.
This amendment is consequent on Amendment 16.
Amendment 21, page 119, line 22, at end insert—
“(za) provide for the Authority to undertake a review of, and report publicly on, the extent to which the activities under sections 41A and 41AA are achieving effective governance of climate change risk and alignment of pension schemes with the Paris Agreement goal;”.
This amendment enables the regulator to publicly assess the progress and development of schemes’ strategies to achieve alignment with Paris agreement goals.
Amendment 22, page 119, line 25, after “41A”, insert “, 41AA”.
This amendment is consequent on Amendment 16.
Amendment 23, page 119, line 30, after “41A”, insert “, 41AA”.
This amendment is consequent on Amendment 16.
Amendment 24, page 119, line 37, after “41A”, insert “, 41AA”.
This amendment is consequent on Amendment 16.
Amendment 2, in clause 125, page 120, line 32, at end insert—
“(e) the results of due diligence undertaken by the trustees or managers regarding the intended transfer or the receiving scheme.”
This amendment enables regulations under inserted subsection (6ZA) of section 95 of the Pension Schemes Act 1993 to prescribe conditions about the results of due diligence undertaken in relation to a transfer request such as to determine that the statutory right to a transfer is not established if specific “red flags” are identified in relation to the transfer or intended receiving pension scheme. Amendments 3, 4 and 5 are related.
Amendment 3, page 121, line 27, at end insert—
“(e) the results of due diligence undertaken by the trustees or managers regarding the intended transfer or the receiving scheme.”
This amendment enables regulations under inserted subsection (5A) of section 101F of the Pension Schemes Act 1993 to prescribe conditions about the results of due diligence undertaken in relation to a transfer request such as to determine that the statutory right to a transfer is not established if specific “red flags” are identified in relation to the transfer or intended receiving pension scheme. Amendments 2, 4 and 5 are related.
Amendment 12, in schedule 9, page 178, line 14, after “scheme,” insert—
(iva) the total cost of charges incurred for the administration of the scheme”.
This amendment would add information about the total cost of charges incurred for the administration and management of occupational pension schemes in Northern Ireland to the list of information displayed on the dashboard.
Amendment 4, in schedule 11, page 192, line 20, at end insert—
“(e) the results of due diligence undertaken by the trustees or managers regarding the intended transfer or the receiving scheme.”
This amendment enables regulations under inserted subsection (6ZA) of section 91 of the Pension Schemes (Northern Ireland) Act 1993 to prescribe conditions about the results of due diligence undertaken in relation to a transfer request such as to determine that the statutory right to a transfer is not established if specific “red flags” are identified in relation to the transfer or intended receiving pension scheme. Amendments 2, 3 and 5 are related.
Amendment 5, page 193, line 15, at end insert—
“(e) the results of due diligence undertaken by the trustees or managers regarding the intended transfer or the receiving scheme.”
This amendment enables regulations under inserted subsection (5A) of section 97F of the Pension Schemes (Northern Ireland) Act 1993 to prescribe conditions about the results of due diligence undertaken in relation to a transfer request such as to determine that the statutory right to a transfer is not established if specific “red flags” are identified in relation to the transfer or intended receiving pension scheme. Amendments 2, 3 and 4 are related.