Queen’s Speech reveals workplace pension crackdown to prevent another BHS ‘scandal’
PENSION savers will get greater protection for their retirement pot as part of a new crackdown of private saving schemes.
The Queen used her State Opening of Parliament speech to confirm the tougher stance on company bosses in the Pension Schemes Bill.
The bill, which must be approved by the House of Lords, sets out punishments of up to seven years for individuals who neglect defined benefit schemes.
In comes in response to the collapse of high profile companies which left the pension pots of their members under threat.
The BHS pension scheme was left with a deficit of more than £570million when the company collapsed in 2017, resulting in 11,000 workers losing their jobs.
Boss Sir Philip Green agreed to hand over £363million to rescue the BHS pension scheme after coming under fire from The Pensions Regulator.
Top tips to boost your pension pot
IF you're already thinking about your retirement, here are some tips from Aviva on how you can maximise your pension pot.
- Understand where you start: Before you consider your plans for tomorrow, you’ll need to understand where you stand today. Look into your current pension savings and policy and research when you’ll be eligible for the state pension, and how much support you’ll receive.
- Take advantage of your workplace pension: All employers are legally required to provide a workplace pension. If you save, your employer will usually have to contribute too.
- Track down your pensions: If you’ve moved jobs a lot, this means you’ll have several pension pots. It can be hard to keep track of them all, but the government offers a free pension tracing service to help you.
- Take advantage of online planning tools: Aviva and Royal London have tools that give you an idea of what your retirement income will be, based on how much you’re saving.
- Find out if your workplace offers advice: Many employers offer sessions with financial advisers to help you plan for your future retirement.
While construction firm Carillion had a reported pension deficit of £587million when it fell into liquidation in 2018.
The new bill is expected to make it illegal for bosses to show “grossly reckless behaviour” in relation to defined benefit schemes.
A defined benefit pension scheme is an amount your employer guarantees you when you retire, based on how much you earn and how long you’ve worked at the company.
The bill also paves the way for Pensions Dashboards to be introduced which will allow savers to view all their savings in one place.
The government today confirmed the first trials of the Dashboards will go live next year.
The UK’s first Collective Defined Contribution pension scheme is also set to be established through the bill.
The Queen said today: “To help people plan for the future, measures will be brought forward to provide simpler oversight of pensions savings.
“To protect people’s savings for later life, new laws will provide greater powers to tackle irresponsible management of private pension schemes.”
Tom McPhail, head of pensions policy at Hargreaves Lansdown, said: “Regulatory powers in the bill will give the Pensions Regulator more powers in taking to task employers who may be neglecting their final salary schemes in favour of paying dividends out to shareholders.
“It will help strengthen the protection of employees guaranteed pensions, and hopefully cut down on the kind of scandals such as we’ve seen with BHS and Carillion in recent years.”
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