It was introduced to strengthen regulations following some unscrupulous behaviour of companies, most notably Robert Maxwell stealing hundreds of millions of pounds from the Mirror Group’s pension schemes.

Having worked in the pensions industry for well over 30 years, I clearly remember the Act receiving Royal Assent in 1995. What followed was two years of hard work getting clients compliant.

There is no doubt that the Act was good for pension schemes. However, not everything has been a success, so let’s look back at the main features and consider if they have been positive:

Introducing a body responsible for overseeing the running of pension schemes is obviously positive. However, OPRA’s powers weren’t particularly strong and a new body, the Pensions Regulator (tPR), was created under the Pensions Act 2004 replacing OPRA from 6 April 2005. tPR has wider powers and takes a proactive approach so is much better equipped to oversee. Those who have had the “pleasure” of tPR are fully aware of the pain it can inflict if it has concerns of a pension scheme’s management.

Although this sounds great in theory, the practice was different. The MFR level was set low and the carve out of assets on a company’s insolvency was biased towards pensioners. As an example, in the Allied Steel and Wire case, following the collapse of the company in 2002, non-pensioners received only a small proportion of their entitlements. This meant a re-think on the level of protection and resulted in the introduction of, firstly, the Financial Assistance Scheme (FAS) and then, in 2006, the Pensions Protection Fund (PPF). Both FAS and the PPF provide a higher level of protection, but still fall short of providing 100% protection.

Prior to 1997 there was no need to provide increases on pensions in retirement (apart from a small element of Guaranteed Minimum Pension, but that’s an article in itself!). This means that members’ earning power diminishes over time, quite easily halving in value in retirement. The Act introduced a requirement for all pensions earned after 5 April 1997 to be increased when in payment by the lesser of inflation and 5% each year. This is a great benefit to pensioners.

Anything that protects members’ benefits has got to be positive and these two features have further enhanced the protections for members.

Trustee boards previously consisted of company directors and shareholders which meant decisions made had a bias towards the company. Requiring members to have Trustee board representation was a positive step. Such trustees are also able to review communications from the members’ perspective and are often a “friendly” point of contact for members’ questions.

There were other aspects which have also helped frame the pension rules, such as:

·      Greater disclosure of information for members.

·      The requirement for a Statement of Investment Principles.

·      A formal dispute resolution procedure, for members who have a pension-related dispute.

·      The requirement to appoint a Scheme Actuary and Scheme Auditor.

The Act introduced a number of wide-ranging changes to pension scheme governance. Some of these changes have withstood the test of time, and have been improved over the years or deemed inappropriate and replaced with an alternative.

Having worked in pensions for the whole of this period, there is no doubt the Act, and its many changes, have been successful in setting a strong framework for UK pensions. However, it doesn’t end there and a new Act, the Pension Schemes Act 2021, is introducing more changes.

Additionally, the Pensions Dashboard, the excellent initiate of the DWP, has now had its timetable published by the Pensions Dashboards Programme which confirms that a year from now the Dashboard will be available to the largest schemes’ membership as a starting point.

Thankfully I am retiring at the end of April therefore won’t need to learn about all these changes. Thirty plus years of change is enough for me!