Department for Work and Pensions
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Securing the pensions promise - Winterton
Today the Government tabled amendments to the Pensions Bill that would introduce measures to protect the benefits of pension scheme members.
The Government's intention is to adapt the Pensions Regulator's powers to an evolving pensions market. Its main concern is the emergence of new alternatives to pensions buyouts, which can reduce the security provided by the employer responsible for backing the scheme. These developments may put scheme members' benefits at risk and could have serious cost implications for the Pension Protection Fund (PPF), and those responsible for paying its levy.
Pensions Minister Rosie Winterton said:
"By introducing proportionate powers, which are carefully targeted, we can secure a healthy and innovative pensions industry and security for pension scheme members who have worked hard and saved for retirement.
"Some new alternatives to pension buyouts have emerged that can put members' benefits and the PPF at risk.
"We've listened carefully to stakeholders and, following further work with interested parties over the summer, we have framed these new powers so that they do not have an undue impact on legitimate business activity. To provide the certainty and clarity the industry needs we have tabled amendments that put the changes onto the face of the Pensions Bill. This includes, among other safeguards, a new requirement on the Regulator to produce a statutory Code of Practice to guide application of the new material detriment test for contribution notices".
The new test for contribution notices will be based on "material detriment" where the Regulator will have the power to require a contribution to the pension scheme if a sponsor employer's actions or failures have a materially detrimental effect on the likelihood of members receiving their benefits.
Draft content for the statutory Code, which will support this new test, has also been issued by the Pensions Regulator today. It is expected that the Regulator will consult formally on this Code later in the year, subject to passage of the legislation.
The Government intends that the principal amendments will have retrospective effect from 14 April 2008, the date the Minister announced the intention to legislate.
The intention is for the changes to come into force when the Pensions Bill receives Royal Assent - except for the new material detriment test which would take effect when the Code comes into force.
The Regulator issued a statement on 25 April that set out how it would operate the powers in the interim and this would continue to have effect in the period prior to the coming into force of the legislative provisions.
Notes for Editors
1 The Government's response to the consultation exercise and its April 2008 consultation document are available at http://www.dwp.gov.uk/consultations/2008/
2 The Regulator's 25 April 2008 statement on its approach to using certain of the amended powers is at http://www.tpr.gov.uk/pdf/StatementOnPowers.pdf
3 The Regulator has today published draft content for the Code of Practice on its web pages http://www.tPR.gov.uk
4 The Code of Practice would have evidential value, meaning it will be taken into account by the Pensions Regulator Determinations Panel, a court or tribunal where relevant.
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