Editorial: The Department for Work and Pensions has kept its word with the publication of its highly anticipated white paper, even managing to deliver it ahead of its spring target.
The fines introduced for employers who “wilfully” neglect their schemes – something that might not always be easy to prove – are new, but will only apply to a tiny minority, as some have pointed out.
After the trauma of BHS and Carillion, they are a welcome step in the right direction for some, but for others they are “populist nonsense” aimed at pleasing those out for blood.
The government encouraged the creation of commercial consolidators, but added that a debate on whether these would be allowed to enter the Pension Protection Fund in case of insolvency still needs to be had.
It noted there is “much more to do” until a policy for superfunds could be delivered, and is still developing proposals for a legislative framework and authorisation regime.
A day later, a puzzled industry looked on as, using shock and awe tactics, the first superfund was announced – led by a triumvirate of industry heavyweights, and aiming to score on credibility with a former PPF chief executive, Alan Rubenstein, at the helm.
The question of PPF eligibility in case of insolvency needs to be considered, as backing up commercial pension fund providers would be a wholesale departure from the PPF’s current remit, leaving questions around its right to former profits.
It could be argued that superfunds pose less of a risk to the PPF as their commercial interest should mean they would want to keep operating; although the same commercial interests can lead to excesses that ultimately bring a company down.
Should anything untoward be detected in how superfunds are run, regulation might also crank up quickly; the regulatory risk in running such a vehicle is high – or at least it should be.
How this consolidator will operate in a space where no authorisation or supervision process exists is anyone’s guess. The sheer audacity of the move has to be admired, though whether any trustees would actually want to sign the paper that seals a transfer to a superfund is yet to be seen.
Sandra Wolf is editor at Pensions Expert. You can follow her on Twitter @SandraCWKand the team @pensions_expert.
