Among the list of legislative proposals referred to in the King’s Speech are bills designed to strengthen pension investment and enhance the UK’s banking resolution regime.
The Pension Schemes Bill aims to encourage consolidation and increase the amounts available for savers. Measures include:
- consolidating Defined Contribution individual deferred small pension pots to maximise retirement income and prevent many from losing track of various pension pots;
- introducing a standardised test, to be overseen by the FCA, to trust based defined contribution schemes, ensuring they are delivering value and taking those schemes out of the market which are not;
- mandating pension schemes to offer retirement products rather than just saving pots;
- commercial Superfunds to consolidate the Defined Benefit market;
- re-establishing the Pensions Ombudsman (TPO) powers to those of a competent court, meaning pension schemes will no longer have to apply to courts to enforce TPO decisions; and
- extending the definition of ‘terminal illness’ in the Special Rules for End of Life (Pension Protection Fund and Financial Assistance Scheme) to allow those eligible to receive lump sum payment at an earlier stage.
The Bank Resolution (Recapitalisation) Bill aims to strengthen protections for public funds by ensuring certain costs of managing intervention in failing small banks does not fall onto taxpayers. Instead, BoE will be able to use funds provided by the banking sector to cover certain costs. Where resolution is deemed to be in the public interest, measures include:
- requiring the FSCS to provide funds to the BoE upon request for the resolution of a failing small bank;
- providing that the FSCS can recover the funds from resolution by charging levies on the banking sector (credit unions will not be in scope); and
- permitting the BoE to require banks in resolution to issue new shares, allowing FSCS funds to meet the bank’s recapitalisation costs.