The King's speech on Wednesday unveiled plans for a new Pension Schemes Bill to support over 15 million people with private-sector pensions to ensure better outcomes from their pension assets and to support the Government's mission to deliver growth. However, there was no mention of scaling up automatic enrolment provisions, which the pensions industry has long argued for to ensure people are saving enough to live on in retirement.

The new Pension Schemes Bill has generally been welcomed by the pensions industry. The aim of the bill is to have a private-sector pensions market that encourages consolidation and focuses on value and outcome for members, but which also enables pension schemes to invest in a wider range of assets in the hope of driving economic growth.

The measures in the bill aimed at improving the outcome for members and encouraging consolidation,  include:

• Small pot consolidation – this will enable an individual's small pension pots in different defined contribution (DC) pension schemes to be automatically brought together in one place to maximise income in retirement.

• Value for money framework – a standardised test is to be introduced that trust based DC schemes will need to meet to demonstrate they offer value for money for members. The aim of this is consolidation within the pensions market to leave a smaller number of well-performing and well governed schemes, which will hopefully lead to better outcomes for members and lead to more productive investment funds.

• Retirement income solutions – a duty will be placed on occupational pension scheme trustees to offer a retirement income option (i.e. a pension) or a range of retirement solutions (including default investment options), and not just a savings 'pot'. It is hoped this will improve outcomes for members and lead to more funds being invested for longer, giving the potential for investments in productive assets – boosting economic growth.

• Consolidation through defined benefit (DB) superfunds – this is aimed at offering members in closed legacy DB pension schemes greater protection from the risk of losing part of their pension if their employer/former employer becomes insolvent.

• Rule changes on terminal illness for PPF/FAS members – this will extend the definition of 'terminal illness' for eligible members of the Pension Protection Fund and the Financial Assistance Scheme so they can receive a lump sum terminal illness payment at an earlier stage.

The final measure in the bill will end the requirement for a court to enforce rulings by the Pensions Ombudsman (TPO) in relation to the recovery of the overpayment of pensions. This will make TPO a 'competent court', in a measure the government hopes will reduce cost and alleviate pressure on the courts. 

The Government is hoping that the Pension Schemes Bill will help an average earner, who saves over their lifetime in a DC scheme, to have over £11,000 more in their pension pot with which to secure their retirement income.

The bill, however, does not address the substantial changes to pensions automatic enrolment that the pensions industry has long argued for to encourage the millions of people who are not currently saving enough for their retirement. There is wide agreement across the pensions industry that minimum pension contributions under automatic enrolment need to increase, and there have been recommendations to remove the lower earnings band and reduce the minimum qualifying age to 18. The legislation for such changes is already in place – but we will have to wait a bit longer to see if and when this legislation will be enacted? Such changes to automatic enrolment would have significant implications for employers, but until this is enacted the Pension Schemes Bill itself will have limited impact on employers.