Welcome announcements in the Queen's Speech, December 2019

Published by Danny Wilding on

Following the Queen's Speech Danny Wilding, Partner at Barnett Waddingham, shared his views on some of the announcements which may impact the pensions industry.

Wilding said: “We welcome the reintroduction of the Pension Schemes Bill in the Queen’s Speech, which included long-awaited rules around pensions dashboards, collective defined contribution schemes, and new powers for the Pensions Regulator.
 
“The reappointment of Guy Opperman as pensions minister will ensure the government’s commitment to bringing these changes into law as soon as possible remains firm. This fulfils a pledge in the Conservative Party manifesto, as well as the pledge to launch a review of the tapered annual allowance 'tax trap' within 30 days of the general election. 

 

"The reappointment of Guy Opperman as pensions minister will ensure the government’s commitment to bringing these changes into law as soon as possible remains firm."
Danny Wilding Partner, Barnett Waddingham

On Collective Defined Contribution schemes

“We support the re-ignition of the government’s support for Collective Defined Contribution – CDC – schemes through the Pension Schemes Bill. We believe that these risk sharing arrangements have the potential to provide better member outcomes on average compared with individual Defined Contribution arrangements, and the fixed contribution aspect is likely to be highly attractive to sponsors compared with Defined Benefit schemes.
 
“We hope they will prove popular, and employers and members will see this as an opportunity to make the most of their pension budgets. For a CDC scheme to be successful it will need to have a decent level of contributions, be able to pool risks, and achieve economies of scale to keep expenses at a reasonable level. We believe that the biggest potential market for CDC schemes is therefore not individual companies, but employment sectors within which individuals may move between employers during their career.
 
“One of the key advantages of CDC arrangements is their flexibility – CDC Schemes can invest in riskier assets for longer than Defined Benefit schemes, and be funded on more risky asset strategies and realistic (rather than prudent) funding bases.”

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