Today the long-awaited Pensions Bill was published. The Bill is available in both pdf and html formats; the accompanying Explanatory Notes only in html. A summary of the Government's intentions can be found in a DWP press release.

The Bill is in seven parts: an initial summary of the contents follows.

Part 1 establishes The Pensions Regulator, to replace Opra, and like Opra it will be funded by a levy on schemes. A new tribunal - The Pensions Regulator Tribunal - will be set up to handle references from determinations made by the Regulator. A DWP Factsheet [pdf] provides further details.

Part 2 establishes the Pension Protection Fund, to be funded by three levies: the pension protection fund levy (for at least the first year, based only on scheme factors such as number of members and the balance between active and retired members; but in the long-term at least 50% on risk-based factors); an administration levy; and a fraud compensation levy to be paid if and when a case of fraud occurs. Another DWP Factsheet [pdf] gives details.

Part 3 sets out the statutory framework for the scheme funding requirements which will replace the MFR. Private sector defined benefit schemes will have to fund to cover their actuarial liabilities, in line with the IORP Directive.

Part 4 briefly introduces a new, explicit function of the Secretary of State to promote and facilitate retirement planning and provides for reserve powers, as identified in the DWP's "Informed Choices" earlier this month, to require employers to provide pensions advice in the workplace and schemes to provide combined pension forecasts.

Part 5 makes a number of changes affecting administration of occupational and personal pension schemes. These include the following:

1. New MNT rules, requiring most occupational schemes to ensure at least one-third of trustees are member-nominated trustees. These replace not only ss. 16 - 21 of the Pensions Act 1995, but also ss. 43 - 46 of the CSPASSA 2000, which were not commenced.
2. A statutory requirement for individual trustees of occupational pension schemes to have knowledge and understanding of the law relating to pensions and trusts, investment of assets, scheme funding, etc ( a Code of Practice is to be issued by the Regulator setting out details of what kinds of training or experience will be required).
3. Conditions under which employees involved in TUPE transfers are eligible for pension protection.
4. Revised dispute resolution requirements.
5. A new LPI limit (ie 2.5% instead of 5%) applicable from a (future?) commencement day.
6. A few limited amendments to the contracting-out rules, chiefly removing certain restrictions on commutation and the age at which protected rights benefits may be received.

Part 6 covers the options for pensioners who defer taking their State Retirement Pension (the related Schedule 10 is testimony to the enduring complexity of the state pension system).

Part 7 covers a few miscellaneous and supplementary matters.

What’s missing?

As feared, many issues regarded by the industry as vital to simplification appear to have been left behind in the 'too difficult' tray. Even many of the subjects raised in the December 2002 Green Paper and subsequently have been left out of the Bill, such as:

• Changes to the Reference Scheme Test
• Abolition of safeguarded rights
• Conversion of GMPs and abolition of anti-franking rules
• Equalisation of GMPs
• Relaxation of section 67 of the Pensions Act 1995 (modification of members' accrued rights)
• Simplification of transfers
• Immediate vesting or transfer option for early leavers
• Obligation to provide an AVC facility.

A great deal is left to subsequent Regulations.

Update 05/03/2004
Some of these issues, notably the last two and possibly section 67, are likely to be dealt with by Government amendments during passage of the Bill through Parliament - and indeed, such intentions were subsequently announced in the Second Reading debate on 2 March.