Calum Cooper, Head of Pensions Policy Innovation, Hymans Robertson, says: “We welcome the promise of a new pensions bill in today’s King’s Speech. The new government is clearly identifying the importance of pensions and the outcomes that will be vital for millions of savers. In its inclusion of measures around both small pots and value for money, it is good to see a continuation of some of the work already done. We hope it will utilise the collective industry wisdom that’s already been pooled through many pensions consultations over the last few years as it drives action forward.
“We are also very encouraged to see that the focus returning to a pension being a pension; not just a savings product. The bill should empower new thinking and actionable innovation around retirement choices for DC members. This should include sophisticated "straight through” decumulation products to help people navigate from work into retirement safely and successfully. Done well it can also empower collective savings that deliver incomes for life at a higher level.
“As a founding adviser to Clara we also see the huge benefit of using commercial consolidation in defined benefits. But it is vital to ensure it is done in a way that delivers better member outcomes. Demonstrating better member outcomes should be a key requirement.
“It is clear that the government wants pensions, and the National Wealth Fund bill, to play a role in providing meaningful stimulus to UK productivity. For this, the pensions industry will need clarity – both a practical road map and clear and attractive opportunities to invest at scale. Hopefully, this bill will play an important part in stimulating this thinking and direction too. There is a huge societal opportunity in unlocking the productive potential of our £2.5trn of pensions.
“Given how important pensions are to everyone it’s disappointing to see that the pensions review, promised in the Labour manifesto, was not included in the King’s Speech. This is a strong start but there are some tough choices to make beyond consolidation and decumulation defaults, for example getting the self-employed saving and increasing savings levels. An independently led review, with cross party support would give us the best chance of providing meaningful change for a generation that will ensure sustainable pensions. We hope it will be high on the government’s agenda and included in the Chancellor’s Budget in the Autumn.”
David Lane, Chief Executive of TPT Retirement Solutions, said: “The inclusion of a new Pensions Bill in the King’s Speech is encouraging for those who want reform to improve retirement outcomes for members. This Bill will allow the Government to quickly implement the major changes required once it has completed its Pensions Review. Hopefully, the launch of this review will happen soon. Encouraging more productive investment in the UK may be welcomed by trustees who will be open to increasing allocations. However, the Government must not force trustees to invest at the expense of their fiduciary duty. Investment performance should remain the priority for pension schemes.
“We would urge the Government to also implement much-needed pension reforms that don’t require new primary legislation. The most important of these is reducing the age for automatic enrolment to 18 and abolishing the lower earnings limit for contributions. These changes could significantly increase the retirement savings of thousands of workers.”
Simon Kew, Head of Market Engagement at leading independent consultancy Broadstone, said: “The Pensions Bill was a surprise inclusion in the Kings Speech but largely continues the direction of travel from the previous government in various areas such as the consolidation of small pots and a Value for Money framework.
“The problem of small pots is likely to take years to solve so it is good to see that there is an urgent desire to fix this issue. While there is a mention of commercial superfunds, which have already completed their inaugural deals, the public sector consolidator idea is conspicuous by its absence.
“The Bill also contains measures for the trustees of pension schemes to offer savers retirement products so they have a pension and not just a savings pot when they stop work which can help drive up engagement. The challenge of retirement income from Defined Contribution funds is massive and adding some paternalism back into the system seems to be the only way forward.
“The government’s analysis suggests that it will increase pot size at retirement by as much as 9% for the average earner contributing to a pension over the course of their career which will be a major boost for savers. There is a strong focus, as expected, on the productive investment of pension capital but that may be a tougher nut to crack in the short term.”
“The legislative direction of travel outlined in the Kings Speech is understandable as a smaller number of larger pension schemes brings efficiencies for providers, investment opportunities for the government and easements for regulators. The hope is that the combination of these will lead to better outcomes for members while these goals clearly remain consistent with the terms of any deeper review of financial services and pensions.
“It may clear the way for the wide-ranging Pensions Review to tax reliefs, the state pension and advice/guidance – all areas which could benefit with from longer and considered consultations.”
Kate Smith, Head of Pensions at Aegon, comments on surprise Pensions Schemes Bill: “With so much of Labour’s pre-election talk centring on their desire to complete a full review of the UK’s pensions landscape, we had expected the new government to skip the inclusion of a Pensions Bill in today’s King’s Speech. To our surprise, that’s exactly what we ended up getting.
“The new Pensions Schemes Bill looks like a sign of continuity, adopting many pensions policies already in motion from the previous government. Labour will be moving fast to make this happen, improving saver outcomes and supporting investments by enabling schemes to invest in a wider range of assets.
“The measures proposed include the consolidation of small, deferred DC pensions pots and progress on the Value for Money framework, both of which allow for consolidation and leading to better member outcomes. In addition, trust-based schemes will be legally required to offer retirement products in-house or in partnerships, as well as a default solution for those unable or unwilling to make their own choices.
“We also welcome the National Wealth Fund Bill, and look forward to seeing more detail on both this and the Pensions Schemes Bill going forward.”
|
