Their interwoven impact on pension fund investment and attitudes towards private pension savings and outcomes represent a key challenge but also a key opportunity for the new government.
Commenting on the letter to Ministers, ACA Chair Stewart Hastie, said: “We look forward to working with both DWP and the Treasury on the important areas on pensions and investment outlined in the Labour manifesto, which we suggest can only be successfully pursued by taking the pensions industry, trustees and business with them.
“We are looking for early clarity from Ministers to understand more details on their key priorities and how the pensions review outlined in their manifesto might progress both in scope and timing.
“Whilst today’s announcement of a Pensions Bill is welcome, notably important initiatives to improve outcomes for DC members and the introduction of the long awaited legislation for superfunds, keeping momentum on outstanding issues is essential, such as the publication of the new DB Funding Code and delivery of pensions dashboards.”
The ACA letter highlights other existing pension policies that have been held up due to the General Election that it would like to see progressed soon by the new Government, including:
Urgent clarification of several outstanding regulatory issues in respects of the abolition of the Lifetime Allowance.
Expanding coverage of Collective Defined Contribution (CDC) schemes, through the introduction of legislation for whole-life multi-employer schemes.
Completing Value for Money initiatives that are practical to implement.
Extending Auto-Enrolment coverage as agreed by Parliament.
Stewart Hastie added: “We see an important holistic link between pensions and the financial policies pursued by the government. We are supportive of the joint department appointment for the new Pensions Minister as in our view, it is important that there are closer links between the priorities of both the Treasury and DWP. Given the wide industry consensus, we also see the opportunity for the new Government speedily progressing steps to encourage greater long term investment flexibility for DB schemes and their ability to share surpluses with sponsors and members where appropriate.
“With the right safeguards, utilising current and future surplus assets in the £1.4 trillion of UK DB pensions, schemes can make a meaningful difference to employers and the resources they have available to invest in their businesses and improve long-term savings for their current workers. At the same time, new flexibility for DB schemes could help bring additional benefits to their members. Safeguards including legislative and regulatory measures can be accommodated within the existing frameworks. Industry estimates suggest from £100 billion to £250 billion of surplus assets could be released from DB schemes over the next 10 years to support employers, members and current employees if legislative changes are forthcoming in the near term.”
The ACA letter added on consolidation, for very small DB schemes and a limited group of very poorly funded schemes that are already well-known to TPR, the introduction of the PPF as a public sector consolidator could be useful. However, given the well-functioning commercial markets for end-game solutions that already exist, ACA believes the scope of any public sector consolidator should be strictly limited to those schemes that would be unable to access a commercially available solution in the future.
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