Margaret Snowdon, Chair of PASA, commented: “While there are a succession of significant events and challenges already underway this year, such as the Budget and the outcome of tax relief on pensions, we should not allow those issues to cloud our focus on looking much longer term. Yes, there are already many challenges: cyber crime; pension flexibility; the issue of the guidance trap to name just a few. But as an industry, we should not allow what is happening right now to dilute our focus on looking much longer term.
“In 2020, five years on from the introduction of the changes brought about by pension freedoms, the world of pensions is going to look and feel like a very different place. It’s a whole new interesting and exciting space, and we mustn’t lose sight of that or we will be doing pension scheme members an injustice.”
PASA outlines the key areas to watch over the next five years as:
• Value for money will be the buzzwords for the next few years, and this can only be a good thing for anyone saving into their pension. With the focus on exit charges and the continuous drive for efficiency, schemes will inevitably start to consolidate and simplify.
• Smaller schemes (DC first) will be encouraged to think about the value they offer to members through going it alone and where the value is poor, will look to ways to sharing appropriate resources. As administration accounts for roughly 30% of the expenses and can contribute proportionately greater value, consolidating administration will be a positive approach, whether via a master trust or shared services.
• The emergence of a secondary annuity market in 2017 will impact administrators, and the need for policyholder protection and mortality information cries out for support by administration companies. While this may prove to be something of a cross to bear for annuity providers and life insurance companies, it is the right thing to do for those annuity holders who may regret taking their annuity before the pension freedoms were announced.
• DB flexibility will change the landscape of pension saving as we know it and Administrators will be in the thick of dealing with it. Flexibility and choice are the key words and it is right that DB scheme members have the same level playing ground as those people with a DC pension.
Margaret Snowdon added: “The rise of health data collection, Robo Advice, gamification in pensions communication and the use of voice biometrics, apps and channels will provide the catalyst for the transformation of the industry. Robotics will emerge from manufacturing and drive into services, like pensions administration. Perhaps administrators will then be key to restoring confidence in saving for retirement and help avoid the spectre of pensioner poverty. Now that’s a future we would all like to see.”
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