Pension Schemes Bill [Lords] – in a Public Bill Committee at 3:00 pm on 7 February 2017.
Richard Harrington
The Parliamentary Under-Secretary of State for Work and Pensions
As I explained, there are criteria that a master trust must meet to be authorised by the regulator, one of which is that the scheme has an adequate continuity strategy. The Clause sets out the requirements for that continuity strategy. It must set out how the interests of scheme members will be protected if the scheme experiences a triggering event—that is, an event that could put the scheme’s future at risk.
The aim behind the clause and the related measures is to ensure continuity of pension saving for the members of the scheme when that scheme experiences an event that could put its future at risk. That also benefits employers using the scheme, particularly those using it to meet their automatic enrolment legal obligations. An adequate continuity strategy would demonstrate that careful consideration had been given to what the scheme would do if it were at risk of failing. That should make the closure of master trusts more orderly and managed, which is good for members and employers. We all agree that chaotic and unplanned closures would likely be detrimental to them.
The reasons for and circumstances that could lead to a master trust failing may be different from more traditional occupational schemes. The risks for members and employers are different. That is of particular significance because master trusts tend to have a relatively high number of employers and members, and therefore tend to be less engaged than when an employer has a single scheme for their own employees.
That means that winding up a master trust may involve a lot of work and take a lot of time, and be complicated, difficult and expensive. Regulations under the clause will set out what the strategy should include and what actions the scheme will take to manage and protect the assets. The Government believe it essential that master trusts have adequate continuity strategies.
Nigel Mills
Conservative, Amber Valley
I have a quick question. Subsection (9) says that the strategy must be sent to the regulator within three months of being revised. Given that that must mean the strategy has been revised and finalised, why would we not want the regulator to get sight of it much quicker, in case there is something in it we are concerned about?
Richard Harrington
The Parliamentary Under-Secretary of State for Work and Pensions
I believe the three months was reached after discussion with the regulator, taking the worst case into consideration. That is a long stop—it would generally be quicker than that—but it came out of discussions with the regulator.
We believe it is essential that master trusts have those continuity strategies and I hope Clause 13 will stand part of the Bill.
A parliamentary bill is divided into sections called clauses.
Printed in the margin next to each clause is a brief explanatory `side-note' giving details of what the effect of the clause will be.
During the committee stage of a bill, MPs examine these clauses in detail and may introduce new clauses of their own or table amendments to the existing clauses.
When a bill becomes an Act of Parliament, clauses become known as sections.
A parliamentary bill is divided into sections called clauses.
Printed in the margin next to each clause is a brief explanatory `side-note' giving details of what the effect of the clause will be.
During the committee stage of a bill, MPs examine these clauses in detail and may introduce new clauses of their own or table amendments to the existing clauses.
When a bill becomes an Act of Parliament, clauses become known as sections.
