Consolidators unfazed after being dropped from pensions bill

The two consolidators – The Pension SuperFund and Clara Pensions – said they were unsurprised by the omission of superfunds from the bill announced in the Queen’s Speech yesterday, and said they are working closely with the Pensions Regulator to secure clearance for deals already in the pipeline.

Consolidators technically do not need a law change to proceed with separation of schemes from their sponsors, but they have consistently said they are unwilling to do so without the government’s long-awaited guidance on the subject.

While the government missed the opportunity to announce its blueprint for consolidation yesterday, the superfunds' lack of surprise suggests they are confident the regulator will issue guidance on the new regime soon.

Taking forward the proposals from the 2018 DWP white paper to strengthen protection for savers by allowing consolidation and the creation of superfunds to protect member benefits would create an incentive and achievable goal for employers to accelerate funding into schemes

Nigel Peaple, Pensions and Lifetime Savings Association

Lincoln Jopp, non-executive director at The Pension SuperFund, said: “We didn’t expect there to be anything in the Queen’s Speech about superfunds and have been working with the regulator on that basis since we submitted our first deal for clearance back in May.

“We continue to work constructively with TPR to get a framework in place so we can get on and do the deals which the industry and trustees are crying out for.”

Similarly, Adam Saron, chief executive of Clara Pensions, said: “While we had hoped to see consolidation included in the Queen’s Speech, we are confident that TPR can properly oversee consolidation and the transactions that can legally and safely take place under the current rules.”

He added: “Clara strongly supports an authorisation regime that puts members first and therefore we continue to work with government so that consolidation can be included as the pension schemes bill progresses.”

Missed opportunity for consolidation

However, others in the industry have expressed disappointment at the lack of provisions in the bill, saying they would like to see the final regime on superfund consolidation clarified sooner rather than later. Indeed, prior to the Queen's Speech, Work and Pensions Committee chair Frank Field questioned the Department for Work and Pensions over the apparent lack of member protection involved in letting superfunds continue under standard pensions regulation.

Nigel Peaple, director of policy and research at the Pensions and Lifetime Savings Association, said: “11m people in the private sector schemes rely on the benefits from DB pension schemes for a secure pension in retirement.

“However, despite employer contributions of £400bn over the last decade, 3,500 DB schemes have a combined £188bn deficit, and 3m people have just a 50/50 chance receiving their benefits in full.”

He added: “Taking forward the proposals from the 2018 DWP White Paper to strengthen protection for savers by allowing consolidation and the creation of superfunds to protect member benefits would create an incentive and achievable goal for employers to accelerate funding into schemes.”

Has Treasury overruled DWP?

Also commenting, Sir Steve Webb, director of policy at Royal London, said: “This bill is notable more for the things that have been left out than for what it contains.

“The absence of vital measures on automatic enrolment and on regulating new superfunds is a sign of a battle inside government where the Treasury once again has defeated the DWP.

“As a result, the vital expansion of automatic enrolment is now on hold, and the regulation of pension superfunds has been left in regulatory limbo.

“It is one of the biggest failings of UK pension policy that the department with lead responsibility for pensions can be thwarted in bringing forward sensible reforms by an over-mighty Treasury which has no vision for pensions.”