The Department for Work and Pensions (DWP) has amended draft no-deal Brexit regulations to remove a provision which would have made pension scheme investments illegal.
An updated version of the regulations allows pension schemes to invest in EU-regulated markets, not just UK-regulated markets as initially planned.
Retirement Planner’s sister title Professional Pensions revealed the previous iteration of the regulations would have left pension schemes only able to invest in UK-based recognised investment exchanges, such as the London Stock Exchange or London Metal Exchange.
This would have disallowed investments via Dublin or Luxembourg, for example, and required schemes to reallocate assets if the UK crashes out of the union without a deal.
A DWP spokesperson has now confirmed the amendment was in response to these concerns, adding that the government was “confident” a Brexit deal would be reached, rendering the regulations unnecessary anyway.
They added: “These are draft regulations designed to ensure that pension providers’ investment portfolios are not disrupted in the unlikely event of a ‘no deal’ scenario. We became aware of concerns about the wording in the original draft regulations and updated the legislation promptly.”
The change is one of many amendments to occupational and personal pension scheme law and is designed to ensure business as usual as far as reasonably possible in the event of a no-deal Brexit.
Hogan Lovells partner Faye Jarvis said her concerns around the initial draft regulations had now fallen away.
“This is good news because, obviously, it would have been nonsensical if we’d ended up in a situation where pension schemes had to disinvest because of the change in law,” she said. “Pension schemes can breathe a sigh of relief that they won’t have to be doing that now.”
But she warned schemes to pay attention to any further changes to the regulations in case they brought such unintended consequences again.
“People will need to be scrutinising and seeing what else is coming out in terms of draft regulations to make sure there aren’t any other inadvertent errors but also to check there aren’t any unexpected impacts.”
The update comes ahead of a crucial vote on Theresa May’s withdrawal agreement, which is expected on 15 January. If the deal is rejected, it brings the UK closer to a no-deal outcome.