The new Pensions Scheme Act received Royal Assent on 11 February 2021. The Act covers a number of important pensions-related issues and has faced a long journey through parliament, starting in October 2019, that included delays due to both Brexit and the coronavirus pandemic.
The Act has been described by government as ‘the biggest shake-up of UK pensions for decades. The Act will provide for enhanced powers for the Pensions Regulator, including the power to impose civil penalties of up to £1 million and three new criminal offences.
One of new criminal offences, that could result in up to seven years in prison, will target bosses who run pension schemes into the ground, or plunder pots to line their own pockets. This is expected to strengthen the regulators’ powers to take efficient and timely actions to protect members’ hard-earned savings.
The legislation also introduces a new pensions dashboard creating one single platform to access and review pension pots, and the creation of new style collective defined contribution (CDC) schemes. CDCs have the potential to increase returns for millions, whilst being more sustainable for both workers and employers.
The Act also aims to ensure that pensions help with climate change governance by moving towards a net zero future through climate risk reporting.
The measures in the Act will come into force at different times as secondary legislation is introduced.