I beg to move

That the Occupational Pension Schemes (Administration, Investment, Charges and Governance) (Amendment) Regulations (Northern Ireland) 2024 be approved.

The Business Committee has agreed that there should be no time limit on the debate.

The rule is the first of four sets of regulations relating to pensions that we are considering today. The regulations require the Assembly's approval, and, due to its absence, they have been revoked and replaced on several occasions. Otherwise, they would have expired at the end of the six-month period from the date that they came into operation. As the provisions are somewhat technical, I should, at the outset, explain and perhaps warn that some pensions jargon is inevitable.

The rule is the current replacement for the original regulations that came into operation on 6 April 2023. It amends a number of sets of existing regulations, including the Occupational Pension Schemes (Scheme Administration) Regulations (Northern Ireland) 1997. The rule places administration and governance requirements on trustees of occupational defined contribution pension schemes, in particular to require trustees of certain schemes to disclose their investment returns and demonstrate that they are providing value for their members. It also increases flexibility for defined contribution schemes to make greater use of performance fees payable to fund managers when they deliver healthy returns on their default investment arrangements. Those are funds into which members are automatically placed by the scheme.

It makes other changes to the ways in which specific types of pension schemes must comply with the requirements to produce a statement of investment principles. For example, it includes provision to require trustees of relevant schemes to include an explanation of their policy on investing in illiquid assets. The regulations also require trustees of relevant schemes to report annually on the percentage of assets allocated to different investment asset clauses in their default arrangements and to disclose certain specified performance fees incurred in the scheme year. Those measures aim to encourage the consolidation of defined contribution pension schemes so that members are able to benefit from economies of scale and access to a diverse range of asset classes that larger schemes bring. They have been introduced alongside guidance to help trustees of schemes that are in scope to meet the requirements.

The regulations also require trustees of qualifying collective money purchase schemes to include an explanation of their policies on investing in illiquid assets in their statement of investment principles. That is to reflect the fact that such schemes do not have default investment funds. They also make consequential amendments to, for example, the information that must be published on a publicly available website. The regulations amend the definition of charges to exclude performance fees when assessing whether a scheme complies with the charge cap. That is the limit on the charges that can be applied to default investment funds. In complying with the requirements to assess the value for members that their scheme provides and to report net investment returns and on costs and charges, trustees and managers are required to have regard to guidance issued by the Department.

In summary, the measures in the regulations offer opportunities to improve outcomes for members of defined contribution schemes.

Minister, thank you for opening the debate.

I rise as Deputy Chair of the Committee for Communities to support the introduction of the Occupational Pension Schemes (Administration, Investment, Charges and Governance) (Amendment) Regulations (NI) 2024.

The Committee considered the regulations at its meeting on 11 April, and members were made aware of the fact that the update is needed to enhance the framework governing occupational pension schemes across the North. The amendments focus on four key areas — administration, investment, charges and governance — and will amend existing regulations to require trustees or managers of most defined contribution occupational pension schemes to publish their policies on investment in illiquid assets and information about the types of assets in which their schemes have investments. Members also recognise that the regulations further amend a number of sets of existing regulations relating to the administration and governance of occupational pension schemes.

Improved administrative processes will ensure the most efficient management of pension schemes. That includes updated record-keeping requirements and enhanced data protection measures to safeguard the personal information of scheme members.

The regulations introduce new guidelines for the investment strategies of pension schemes. Those guidelines emphasise the importance of sustainable and responsible investment practices, aligning with global best practice and considering the long-term impact on the environment and society.

In order to protect scheme members from excessive charges, the regulations set clear limits on the fees that can be charged by pension scheme providers. That ensures that members receive the maximum benefit from their contributions and that their pensions are not eroded by high administrative costs.

Lastly, the regulations will support the introduction of stronger governance measures to ensure that pension schemes are managed in a transparent and accountable manner. That includes stricter requirements for the qualifications and conduct of trustees and managers of pension schemes, as well as regular reporting and oversight mechanisms.

The Committee is content to support the regulations as it understands that the intent is to improve benefits to members. The amendments will provide greater scrutiny and peace of mind to pension scheme members from knowing that their retirement savings are being managed prudently and ethically. By fostering transparency and accountability, we build greater trust in the pension system.

The Committee understands that the amendments have been developed in consultation with industry experts, stakeholders and representatives of pension scheme members. There is broad support for the changes, reflecting a consensus on the need to modernise and strengthen our pension regulations. Therefore, I am content to recommend that the Assembly approves the regulations.

This afternoon, the Minister for Communities will bring before the Assembly a number of motions relating to statutory rules and regulations regarding pension matters and social security benefits. Each of those matters of legislation has its own importance. Whilst the technicality might not be the most exciting for a debate, they have their importance, particularly in establishing parity between arrangements in Northern Ireland and elsewhere in the United Kingdom, given that pensions are organised generally at that level.

As the Deputy Chair said, the Committee for Communities considered these matters, and my colleague on the Committee, Maurice Bradley, and I welcome the fact that the Minister is now bringing them before the Assembly.

I call the Minister for Communities to wind up the debate on the motion.

I am grateful to Mr Kingston, the Deputy Chair and the rest of the Committee for their support. I commend the motion to the House.

Question put and agreed to. Resolved:

That the Occupational Pension Schemes (Administration, Investment, Charges and Governance) (Amendment) Regulations (Northern Ireland) 2024 be approved.