Patrick Luthi, CEO of NOW: Pensions, comments: “We welcome the Government’s launch of its promised review of pensions and retirement savings policy. We believe there is an urgent need for a strategic and consensus-driven approach to tackling some of the problems in the UK pension system and welcome the leadership of the first joint HMT and DWP Minister for Pensions on these matters.
“There is clearly a shared interest for pension schemes and government regarding investment potential – for simultaneously supporting economic growth and achieving pensions outcomes. It will be key for member outcomes to remain front and centre of initiatives – both in terms of investment policy, and also the delivery of initiatives such as Value for Money. Maintaining the primacy of fiduciary duty will help ensure that focus. Creating a sustainable future for members must also remain a fundamental priority, and we are keen to see integration of this imperative in any new investment policy developments.
“We very much also recommend incorporating into the Pensions Review a number of key challenges that the pension system is facing now and also those which will impact over the next decade – and therefore we welcome and support the Government’s reference to a part two to the Review – the second part including matters of adequacy. We believe this should include collaborative development of a roadmap for the future of automatic enrolment; a strategic approach to policy development on wider specific policy issues (including small pots, decumulation, and value for money); and a number of key safeguards to help steer policy development and delivery – to ensure members remain at the heart of policy solutions, to secure strategic alignment across the pensions agenda and beyond, and to create clarity for business.
“We look forward to working with government on these vital issues.”
Calum Cooper, Head of Pensions Policy Innovation, Hymans Robertson, says: “The silence on pensions review in the King’s speech was a worry. So, we’re relieved and excited to see Labour re-affirm the pension review, and at pace. The focus on investments is a sound place to start: the emphasis being doing more with what we have and where political capital can be built, not spent. This is about pace, momentum and confidence in areas that do not cost money. In practice, to support this the pensions industry needs a practical road map and attractive opportunities. As part of the review, once the Government has identified where investment is most needed, it must ensure this roadmap is clear and make it attractive to pensions. The pensions and financial services industries will then be able to support it and align this approach with their long-term goals.
“We look forward to the intended second phase of the review and take comfort from the intent to include the intent to ‘improve pension outcomes including assessing retirement adequacy’. There’s a big intergenerational gap between those with adequate DB pensions and younger generations on course for inadequate DC pensions incomes. Whilst AE has been a huge success in getting the employed saving for later life, the level and breadth of saving is not enough and there is so much more to be done. Our analysis has shown that only 1 in 3 DC pensions scheme members are expected to reach the PLSA’s ‘moderate’ retirement living standard let alone the ‘comfortable’ standard. There’s also a gender pension gap to be closed; how do we improve the fact that men expect more than 25% higher pensions than women? We hope this second stage of the review considers all these aspects and encourages the industry to think innovatively to find the solutions.
“We still believe that independent pension review and cross-party consensus would be the best way to solve these knottier problems and help ensure the tough choices are made that last a generation.”
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