The U.K. Pension Schemes Bill that will strengthen workplace retirement arrangements for participants in the U.K., received royal approval — known as Royal Assent — from Queen Elizabeth II on Thursday.
The bill, which became the Pension Schemes Act 2021 and was largely unchanged by U.K. Members of Parliament during the legislative process in 2020, establishes new powers for The Pensions Regulator through criminal and civil sanctions that will be placed against company directors. The legislation will allow the regulator to set funding standards for troubled pension funds and utilize criminal sanctions to punish executives for making risky decisions.
Additionally, the act sets a legal framework for online dashboards, where plan participants can see all of their retirement savings, including state and occupational arrangements, in one place.
The act also paves the way for the creation of collective defined contribution plans which, developed in cooperation with trade unions, "have the potential to increase returns for millions, whilst being more sustainable for both workers and employers," a news release on the government's website said.
The legislation also mandates that the U.K. retirement industry considers climate-related risks and opportunities and reporting on these risks in line with recommendations from the Task Force on Climate-related Financial Disclosures.
"The Pension Schemes Act is a welcome shot in the arm for pension schemes which are looking to manage their climate risks and transitioning towards being net-zero investors," Kerrin Rosenberg, CEO of Cardano U.K., said in an emailed comment.
Mr. Rosenberg said that despite challenges, the industry is beginning to undertake scenario analysis and transition to low-carbon portfolios. "Without the new rules, there would be insufficient incentive for trustees, advisers, and asset managers to develop the tools, obtain the data, and create the systems that are required to effectively respond to the climate crisis," he added.
Claire Carey, partner at law firm Sackers, said in a separate emailed comment: "Given TPR's new regulatory big guns, we are likely to see a resurgence in the number of clearance applications, with parties to corporate activity or events seeking reassurance that its civil powers will not be unleashed."