Proposed best practice guidelines in the UK for occupational pension schemes have been quietly dropped because the government feared the industry was being overburdened by legislation.
The aim of the proposed guidelines was to identify best performing schemes and to make them a benchmark against which employers and trustees could judge their own schemes.
News that the government is shelving its proposed guidelines came to light after a letter written by pensions minister Jeff Rooker, passed on by Labour MP for Wirral South Ben Chapman.
The letter said: “Concern was expressed by pension providers that the effect [of the best practice guidelines] would be to add to the burden of regulation on large, well run schemes, which would be anxious to comply with any such guidance.
“In contrast, those schemes which are not well run would be unlikely to respond to guidance, thereby defeating the objective of improving practice across the whole sector.”
Rooker added that he, along with industry representatives, would seek a more “flexible approach” of promoting “improved performance within specific aspects of pension scheme operation”.
The proposed guidelines were part of a process of government consultation lasting four years and included more than 100 lawyers, pension scheme representatives and civil servants taking part.
Pension lawyers welcomed the news that the proposed guidelines were being dropped.
Rowe and Maw partner Anna Rogers said: “I just don't think they do the job that they are intended for. They are not as detailed as regulations, but you need that if you are going to impose penalties. They are also not as helpful as greater disclosure and educational training.”
Hammonds Suddards Edge pensions lawyer Sasha Butterworth said: “There is a lot of red tape and anything that is proposing not to add to that burden is to be welcomed. I think it shows that Jeff Rooker is in touch and is taking a pragmatic attitude.”
By David Rowley
HMRC has confirmed providers operating relief at source pension schemes can continue to collect automatic tax relief at a basic rate of 20% under new Scottish Income Tax rules.
The Pensions Regulator (TPR) is seeking "improved" powers to set a schedule of contributions in defined benefit (DB) schemes in the government's upcoming white paper, it has revealed.
New regulatory rules which require providers and advisers to produce annuity illustrations will not solve the problem of consumer detriment as they are "fundamentally" flawed, according to Retirement Advantage.
Paul Budgen is set to join financial technology and auto-enrolment (AE) firm Smart Pension as director of business development.