MILLIONS in pension cash will be protected by new laws announced in the latest Queen’s Speech, alongside legislation designed to crackdown on tax evasion and financial crime.
A number of MPs this week expressed fears over how gaps in pension regulation have allowed “unstable master trusts” into the market, potentially putting the success of auto-enrolment at risk.
The Queen’s Speech however could put an end to those fears, with the Pensions Bill providing greater supervision and protection for people in master trusts, as well as eliminating barriers for those who want to access their pension savings flexibly.
“We have voiced concerns for some time about the need for stronger legislative standards for master trusts and have worked with government and other regulators to improve levels of protection for members,” said Lesley Titcomb, The Pension Regulator’s chief executive.
“We have been calling for a significantly higher bar regarding authorisation and supervision, and we are pleased that today’s announcement proposes to give us the power to implement these safeguards.”
But not everyone is as pleased regarding the new master trust rules. Tom Barton, pensions expert at Pinsent Masons said: “There are already very large numbers of master trusts up and running and taking in contributions. This looks like a fairly belated attempt to create a barrier to entry – unless it is to apply to existing schemes too.”
Legislation must ‘be phased in gradually’
Tackling financial crime was also on the agenda. The Criminal Finances Bill aims to supercharge the UK’s fight against international financial corruption, focusing on money laundering and bringing to justice those who profit from crime.
The bill includes measures to reform proceeds of crime legislation to allow the government to recoup more illicit income, as well as the previously mentioned criminal offence for corporations that fail to stop staff facilitating tax evasion. The bill also includes new rules to stamp out money laundering in the UK.
John Cullinane, tax policy director of the CIoT has warned that the legislation must have effective guidance so that companies know when they are taking adequate measures to guard against rogue members of staff facilitating tax evasion or money laundering.
“We are concerned about this proposal because we believe there is enough law in relation to corporations in this area already. As with individuals facilitating offshore evasion, it is very problematic to hold a company responsible for an individual’s actions.
“If the government believes that criminal sanctions need to be strengthened in this area then the new offence must not only be phased in gradually to allow businesses time to familiarise themselves with the regime and implement appropriate procedures so that they can comply with it, but it must also be subject to a clear defence of reasonable care being available.
“There have been a lot of proposals for change in this area recently and the Government must be careful not to place unreasonable or unrealistic and expensive compliance burdens on business,” added Cullinane.
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