David Brooks, Head of Policy at Broadstone: Labour’s manifesto contained no notable big-ticket ideas for the pensions’ sector, confirming plans to progress with the productive finance agenda and encourage further consolidation in the workplace pension market.
“The Party has pledged a wide-ranging “pensions review” to improve outcomes, but the devil will be in the detail as to what that covers before we can anticipate any potential outcomes.
“Labour has also, as expected, committed to the State Pension triple-lock and there now seems to be political consensus that this is untouchable. The encouragement for green-focused investments also appears to have achieved cross-party consensus.
“The push for productive finance comes with a caution warning as there may be a disappointing uptake from defined benefit schemes but an ongoing review into VFM may allow more schemes to allocate long-term illiquid assets to this space. Whatever government we have in 3 weeks, we would counsel caution in this space as these assets are not a one way bet and the long-term interests of pension savers will need to be carefully balanced with the short-term needs of the country.
“Given the Conservatives’ plans are similarly light on new policy ideas it suggests the pensions sector can prepare for welcome continuity over the next five years. This is pleasing given the huge number of policies that are already progressing through regulatory and legislative processes.
“Labour’s manifesto also contained no mention of its previous plan to reverse the abolition of the Lifetime Allowance in a suggested U-turn on its previous rhetoric. Again, this continuity is to be welcomed – especially given the industry has already expended significant effort in preparing for this change – but this may be a policy area that Labour revisits should it gain power.”
Richard Gibson, Partner at Barnett Waddingham, comments: “By far the biggest prize for any Chancellor looking to get assets working for the UK economy is the nearly £1.5trillion locked up in private sector DB pension schemes. The near-term focus of the Mansion House reforms is on DC pensions, but Labour's manifesto is clearly committed to pursuing the plans first proposed by the Tony Blair Institute, to bring together hundreds of the smallest private sector DB pension schemes into a single fund, backed and overseen by the public sector"
"This is a sensible strategy. Those schemes could deliver economies of scale and improve asset returns. Many pension schemes are already doing this, and will move over £200 billion to the buy-out insurance market over the course of the next parliament. If the new Government really wants to plan ahead, it must look at how insurers can use that capital for long-term infrastructure and investment in UK markets."
David Lane, Chief Executive of TPT Retirement Solutions, said: “It is promising that the Labour Manifesto recognises the benefits of consolidation in workplace pension schemes. Encouraging consolidation could provide better value to the schemes, incorporate the highest levels of stewardship and, ultimately, deliver better outcomes for pension savers.
“Labour’s plan to review workplace pensions will be welcomed by voters and the pension industry. Our research found nearly nine in ten (88%) working people want the next government to do more to help people save for retirement, as 57% are worried they are not saving enough in their pension. The Party’s commitment to retaining the triple lock will prove popular with older votes, as 63% of those aged 55 or older want it to be maintained.”
Tim Middleton, Director of Policy and External Affairs at the Pensions Management Institute, said: “We are encouraged that the Labour Party has committed to better retirement outcomes for pension savers and that its review will seek to identify the best way to achieve this. Whilst it is unclear at this point what specific outcomes the review is going to achieve; it is important that a thorough review takes place.”
Alan Collins, Managing Director of Spence & Partners, said: "Change is the headline of Labour manifesto, but we are likely to see little or no change when it comes to pension policy. The current direction of travel to strive for consolidation and scale remains, and the pledge to reinstate the Lifetime Allowance has been dropped. I am not sure many would agree that another review is needed on "improving security" or "increasing productive UK investment" - these seem more like holding patterns or a flag that not much is going to change any time soon."
Adrian Kennett, Director, Dalriada Trustees, said: “My worry on Labour and Conservative manifestos is more about what they are not saying. The triple lock is a vote winner - included for both. Labour is supportive of the direction of travel from the Conservative Mansion House speech - seeking to drive UK pension funds to invest in UK assets - something not mentioned in the Conservative Manifesto. Labour will "adopt reforms to workplace pensions to deliver better outcomes for UK savers". The best way of delivering a better outcome would actually be for more workers to contribute more. There is silence on the reforms to Auto-Enrolment. Silence on the PPF as a consolidator. Silence from Labour on the taxation of pensions (e.g. Life Time Allowance). At some point, the books have to be balanced and people have to pay. There are inescapable problems that aren't being talked about - largely the fact that 8% of earnings through auto-enrolment doesn't buy you a comfortable retirement.”
|
