Torsten Bell. Photo: © House of Commons/Roger Harris (CC BY 3.0)
Action can be taken on surplus flexibilities before the Pension Schemes Bill regime is finalised, pensions minister Torsten Bell says.
Speaking to PP just after the 100-plus clause Pension Schemes Bill was laid before parliament this afternoon, Bell admitted the bill was "not a small one" but said it was not just big, but, compared to most pension bills, was also "very broad and covered a wide range of topics".
Bell said this was only part of the government's measures on pensions reform – noting the government would shortly be coming forward with the next phase of the pensions review as well, focusing on pension outcomes.
He said: "See it all as a big package – the Pensions Investment Review, followed by the Pension Schemes Bill, and then swiftly followed by moving ahead with moving ahead with the next phase."
However, the minister rejected any suggestion that the pace of change with regards to providing increased flexibility for defined benefit (DB) pension schemes to release surplus was too slow – even though regulations on surplus flexibilities would not be finalised until 2027.
He said The Pensions Regulator was already talking about the issue and some schemes were already in the position where they could act if they wanted to. Others he said would need time to go through their own processes before the final regime came into play.
Bell added that people would be able to see the bill going through the legislative process before gaining Royal Assent in the in the first half of 2026 and then subsequent regulations would become clear as they went through their consultation process.
He said this was one of the benefits of the government providing the industry with a workplace pensions roadmap.
Bell said: "If trustees have got clear sight of what we're aiming to provide for them over the next three years, that's a big improvement over what they're used to dealing with… They can get on with all their internal processes, even if they are one of the schemes that doesn't currently have the ability to act until we've until we've legislated."
Mandation
Bell also commented on reserved Pension Schemes Bill powers allowing the government to direct the investment of master trust and group personal pension schemes.
In May, a total of 17 of the largest UK workplace pension providers signed the Mansion House Accord – expressing their intent to invest at least 10% of their defined contribution (DC) default funds in private markets by 2030, with at least 5% allocated to the UK.
Some in the industry fear the government could use these backstop powers to force schemes to invest in private markets should they fail to meet these voluntary targets.
Bell said he was not envisioning using the power at all – adding the industry had set out what it thought was right the best interest of their members and noting that some wanted to go beyond the baseline metrics that have been set in the Accord.
But he noted: "That's for individual schemes to decide. And remember, these are about very broad asset classes, so it's obviously different schemes will make different choices about what that means for them. I think that's completely right."
