On Thursday 11th February 2021, the Pensions Scheme Bill was passed which ultimately aims to boost protection for employees saving.
Last week, the Pensions Scheme Bill was given Royal Assent, meaning this “landmark” pensions Bill has now become law.
As part of the Act, the power of the Pensions Regulators will be extended which will ultimately improve the protections that pension savers will have.
This overhaul means that Pension Regulators will now have the power to to issue civil penalties of up to £1 million. In addition to this, there will be a maximum penalty implemented of seven years imprisonment for employers who “run pension schemes into the ground”.
It is hoped that this legislation will deter employers from making reckless decisions with their defined benefit schemes and will strengthen the regulators’ powers to take efficient and timely actions to protect members’ savings.
In addition, this law sees the introduction of pension dashboards which means savers will be able to see how much they can expect each month in retirement. This also allows them to see how their retirement prospects can be improved.
Claire Carey, Partner, at Sackers, a law firm for pension scheme trustees and sponsors, reacted to the Pensions Act becoming law:
The most significant piece of pensions legislation in over a decade finally hit the statute books today. Several years in the making, the Pension Schemes Act 2021 will bolster the pension regulator’s powers through new criminal and civil sanctions, compel DB trustees and employers to think longer term by introducing a new funding and investment strategy, and hopefully help curb pensions scams by imposing new restrictions on statutory transfers.
Whilst the bulk of the Act is largely unchanged from the Bill introduced into Parliament over a year ago, there were some interesting skirmishes during its passage through Parliament. The breadth of two of the new criminal sanctions were, for a time, a particular battle ground, having the potential to capture ordinary business activity, as well as a wide spectrum of people. Given the pension regulator’s new regulatory big guns, we are likely to see a resurgence in the number of clearance applications, with parties to corporate activity or events seeking reassurance that its civil powers will not be unleashed.
Much of the detail in the Act will be bulked out in regulations, and we await the all-important implementation dates.