The Social Welfare and Pensions (Miscellaneous Provisions) Bill 2013 was published on 22 May 2013.
What does the Bill contain?
1. The Bill provides for the previously announced restructuring of the Pensions Board into a Pensions Authority with the position of CEO of the Pensions Board being recast as that of Pensions Regulator. There will also be a Pensions Council to advise the Minister for Social Protection on pensions matters.
2. The Bill is also notable for the increased focus on enforcement of the Pensions Act’s funding requirements. The days of drifting schemes would appear to be numbered.
3. The Bill inserts a new section 50B into the Pensions Act giving new enforcement powers to the Pensions Board to direct that schemes subject to the minimum funding standard be wound up in certain circumstances. This includes circumstances where a scheme fails to submit an actuarial funding certificate or funding proposal on time or where the trustees fail to implement a section 50 order. The new section 50B also allows the Pensions Board to apply to the High Court for an order compelling trustees to comply with a direction or order from the Board to reduce benefits or wind-up a scheme.
4. The Bill also inserts procedural details into section 50 of the Pensions Act laying out the process which will be followed where the Pensions Board decides unilaterally to require trustees to reduce benefits. It also provides for a right of appeal to the High Court on a point of law in the case of a unilateral direction to reduce scheme benefits (under section 50) or wind up the scheme (under the new section 50B) being made by the Pensions Board.
What is missing from the Bill?
It was widely expected that the Bill would introduce changes to the priority order of benefits on a wind-up. Many commentators also thought that the 30 June deadline set by the Pensions Board for submitting funding proposals would be changed to allow schemes to deal with the fall-out from any change in the priority order and as a result of so many schemes in the industry not being in a position to meet the deadline.
A press release explaining the Social Welfare and Pensions (Miscellaneous Provisions) Bill 2013 from the Department of Social Protection suggests that in fact the deadline will remain in place and the wider issues facing DB schemes, including the change in priority order and the consequences of the Waterford Crystal case will now form part of wider legislative reform in the pensions arena later in the year, by which time there is a real possibility that scheme liabilities will have been severely cut consequent on section 50 directions from the Pensions Board.
In light of the uncertainty surrounding pensions following the decision of the Court of Justice of the European Union in the Waterford Crystal case, the decision by the Government to postpone this legislative reform is not altogether surprising.