I beg to move

That the Occupational Pension Schemes (Collective Money Purchase Schemes) Regulations (Northern Ireland) 2024 be approved.

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

Thank you, Mr Deputy Speaker. This rule is the current replacement of the original regulations, which came into operation on 1 August 2022. The rule provides for an authorisation and supervision regime for collective money purchase (CMP) schemes, which are commonly known as collective defined contribution (CDC) pension schemes. Currently, there are two primary types of pension schemes: defined benefits schemes, where the employer underwrites the pension benefits that are paid to employees; and defined contribution schemes, whereby individual members bear all the investment and longevity risks, and there are no employer guarantees regarding what the member may receive at retirement.

Collective money purchase schemes provide an alternative in which the contributions of members and employers are pooled and invested with a view to delivering benefits at the level to which the scheme aspires. They offer potential benefits and economies of scale and the opportunity for greater investment in higher returning assets than are usually associated with defined contribution occupational pension schemes. Their collective nature means that investment and longevity risks are shared across the membership. As these schemes provide an income to pensioner members, there is no need for members to make complex financial decisions at the point of retirement.

Income in retirement from collective money purchase schemes is subject to periodic adjustment, which is designed to achieve a balance between a scheme's assets and the amount required for the provision of benefits. Collective money purchase schemes are believed to be more sustainable for employers and employees alike, and they have the potential to offer better outcomes for pension scheme members.

To build confidence in these new schemes, it is considered essential that only well-run schemes be allowed to operate. The regulations set out detailed requirements for the process for applying to the Pensions Regulator for authorisation, as well as details regarding the authorisation criteria that need to be met in order for collective money purchase schemes to operate. Those include criteria to ensure that only fit and proper persons are involved in key capacities relating to those schemes; that the design of the scheme is sound and complies with the legislative requirements; and that the scheme has sufficient financial resources to meet the costs of setting up and running the scheme and to take the necessary steps if things go wrong.

If the Pensions Regulator is not satisfied that all the authorisation criteria are met, it cannot authorise the scheme. The regulations also set out requirements relating to the Pensions Regulator's supervisory role. The regulator can withdraw authorisation if it is no longer satisfied that the authorisation criteria are met. The regulations set out further detail on information to be provided to the regulator while the scheme is running, which will help the regulator to consider whether it is satisfied that the authorisation criteria for schemes continue to be met.

The regulations also provide more detail about the actions that trustees must take if a scheme experiences a triggering event. Those are certain events, which are set out in primary legislation, that can pose a threat to the future of the scheme and the interests of members. The regulations also provide for consequential amendments to other sets of regulations: for example, to make provision for an alternative automatic enrolment quality test for collective money purchase schemes. These regulations, along with the occupational pension schemes regulations of 2022, implement the authorisation and supervisory regime for collective money purchase schemes.

Minister, thank you for opening the debate.

As Deputy Chairperson of the Committee for Communities, I support the Occupational Pension Schemes (Collective Money Purchase Schemes) Regulations (NI) 2024. The Committee considered this statutory rule at its meeting on 29 February 2024. At that meeting, Committee members were briefed by departmental officials who provided information on the purpose and scope of the regulations. Committee members heard that these regulations revoke and replace the previous 2023 regulations, ensuring the continuity of the authorisation and supervisory regime for collective money purchase schemes.

Collective money purchase schemes, which are also known as collective defined contributions schemes, pool contributions and investment risks, thereby providing more predictable benefits, compared with traditional defined contribution schemes. The key features of the regulations are that the CMP schemes are designed to offer a more stable and reliable income for pensioners by balancing risks more effectively across scheme members, and they include specific provisions for the establishment, administration and governance of collective money purchase schemes.

The regulations outline the criteria for the establishment of CMP schemes, ensuring that they are established by credible and capable entities. Those include rigorous initial assessments to confirm that the proposed schemes have robust financial and operational frameworks. Clear guidelines are provided to ensure efficient administration, emphasising the importance of accurate record-keeping and transparent communication with members. The regulations also require regular reporting to ensure ongoing compliance and effective oversight.

The Committee was content that the regulations promote sustainable investment practices, ensuring that the schemes are aligned with broader economic and environmental goals. The regulations also include strong governance and member protection, including requirements for the qualifications and conduct of trustees and scheme managers. Enhanced protection measures are in place to safeguard members' interests, including mechanisms for dispute resolution and member engagement. The Committee recognises that the regulations support greater diversity and choice in the pensions market for employers and employees.

In conclusion, Committee members were agreed that the Occupational Pension Schemes (Collective Money Purchase Schemes) Regulations (NI) 2024 represented a forward-thinking approach to pension provision. These regulations offer enhanced security, stability and predictability for pension scheme members. Following the briefing and a question and answer session, the Committee recommended that the regulations be approved by the Assembly. On behalf of the Committee, I am content to recommend that the Assembly approves the Occupational Pension Schemes (Collective Money Purchase Schemes) Regulations (NI) 2024.

Thank you for that on behalf of the Committee. I call on the Minister for Communities to conclude and wind on the debate.

Thank you, Mr Deputy Speaker. I am grateful to the Deputy Chair and the Committee for their support and for the evident enthusiasm from the rest of the Chamber. I commend the motion to the House.

Question put and agreed to. Resolved:

That the Occupational Pension Schemes (Collective Money Purchase Schemes) Regulations (Northern Ireland) 2024 be approved.