Wrapping up this week’s manifesto launches from the main UK parties, the Conservatives have set out their pledges. It is in the private pensions space where the Conservatives proposal is most strident. With the BHS inquiry still fresh in the public mind they castigate business owners who abuse pension funds and put them at risk, “sometimes for their own lavish enrichment” and promise to “tighten the rules against such abuse and increase the punishment for those caught mismanaging pensions schemes”.
Existing powers are described as “insufficient” leading the Conservatives to make two promises and a proposal:
- Giving “pension schemes and The Pensions Regulator (tPR) the right to scrutinise, clear with conditions or in extreme cases stop mergers, takeovers or large financial commitments that threaten the solvency of the scheme”
- New powers for tPR “to issue punitive fines” (the Work and Pensions Committee’s ‘nuclear deterrent’) for those that leave scheme wilfully under-resourced and possible powers to disqualify the company directors in question
- Consideration of “introducing a new criminal offence for company directors who deliberately or recklessly” put the scheme at risk.
This contrasts with the recent Green Paper’s caution about proposing new measures, rather than leveraging more effective application of existing powers and it will be interesting to see if the hustings can bring a sharper focus on how these measures might work. It’s not as if they haven’t been considered before, but the pressure to ensure business is competitive is a significant counter-weight.
On the familiar electoral battleground of the State pension, the Conservatives would switch to a Double Lock from 2020 instead of converging with the other parties on the Triple Lock – but as covered in earlier blogs, the cost of this would not generate much in the way of immediate savings. Like Labour, but unlike the Lib Dems, the Conservatives are silent on any changes to the tax regime for pensions – no point poking the hornet’s nest – but unlike Labour they are prepared to proceed with linking the State Pension Age to life expectancy though they’re careful not to provide any gory details.
And of course the stability mantra insinuates its way into the pensions proposals with a ‘steady as she goes’ approach on continuing automatic enrolment and promotion of long-term savings and pensions products, including the Lifetime ISA. The one commitment that feels ambitious is the pledge to extend automatic enrolment to the self-employed – how you stop that turning into the hokey-cokey (ie auto-enrolling yourself only to opt-out) remains, like so much that we can look forward to pondering in the next three weeks, unclear.