Retirement flexibilities and protecting pension savers
“We need to give time for the reforms to bed in. The retirement flexibilities are brand new and we have no idea how customers will respond to the new freedoms. Any new regulation should be in response to actual customer behaviours – not imagined ones. The industry is working flat out to implement the new retirement flexibilities, including the new risk warnings recently announced by the FCA. There is a fine line between protection and obstruction.”
A single regulator
‘’We recognise that having two regulators can lead to overlap and gaps in pension regulation. However, the regulators carry out different roles. The Pensions Regulator is for employers and trustees running pension schemes, while the FCA is for providers and advisers. Both have a customer role, either in protecting customers or improving outcomes. It would be a huge task navigating to a single regulator potentially taking many years. And for what gain? We believe a better way forward is for the two regulators, HMT and DWP to work closely together on shared interests, which is something they are already doing.”
Automatic enrolment
“Auto-enrolment, the first pensions revolution, appears to have been a great success due to the low opt-out rate of around 10%.
However, we agree with the Select Committees recommendations, that the government needs to do more to monitor underlying behaviour such as how long people continue saving in their employer’s scheme, and whether they pay more than the minimum statutory contribution, currently only 2% of a band of earnings. Our own experience is that many of the auto-enrolment population, and their employer, only pay the minimum contribution, and we’ve seen a rise in the number of people who stop saving around four to six months from the date they were auto-enrolled into a pension scheme. As auto-enrolment is rolled out to smaller employers and as the minimum contribution rate starts to increase, the situation may deteriorate. We need to move away from policies based on inertia, to ones based on engagement via digital technology.”
Independent Pension Commission
“We do not support an Independent Pension Commission and do not believe it will deter political risk. Politicians will always want to make their mark and it’s important government has the ability to tackle pressing issues. Pensions policy is jointly owned by the DWP and Treasury, with the latter owning tax policy. Removing control of this from the Treasury could have limitations on macro-economic policy and the government’s tax raising ability.”
Pensions Dashboard
“We support the concept of a pensions dashboard. It will allow people to see all their pensions in one place, including their State pension, enabling people to make informed decisions based on what pensions they’ve already built up, and what more they need to do to achieve their income aspiration in retirement. It’s important to consider all possible options to deliver this and not to rush to a solution. One key criteria is that it must deliver value for money for consumers, who ultimately will be paying for it.”
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