Over the weekend, the government launched its promised review of pensions and retirement savings, which will be led by the new Minister for Pensions, Emma Reynolds – whose portfolio spans across both Department for Work and Pensions (DWP) and HM Treasury (HMT). Findings from the review are likely to feed into the Pension Schemes Bill (which was announced in the King’s Speech) and the Budget later in the year.
now:pensions welcomes the announcement – as 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.
The first part of the review will focus on investment, including productive finance and unlocking the investment potential of the Local Government Pension Scheme (LGPS). There is clearly a shared interest for pension schemes and government regarding investment potential – to simultaneously support economic growth and achieve better pension outcomes. It will be key for member interests to remain front and centre of initiatives – both in terms of investment policy, and also the delivery of initiatives such as Value for Money. As part of these discussions, the primacy of fiduciary duty should be maintained which will help ensure a focus on members. Creating a sustainable future must also remain a fundamental priority for the system and we are keen to see integration of this imperative in any new investment policy developments.
The second part of the review, which is due in the coming months, will focus on adequacy. We are very supportive of this focus and have long been calling for a collaborative development of a roadmap for the future of automatic enrolment to support addressing this challenge. It will be crucial to undertake this work with open engagement with savers, employers and schemes – looking at what should be done and when – and to offer a solution for the long term to enable everyone to plan with certainty.
We welcome the first part of the Review occurring ahead of, and feeding into, the Pension Schemes Bill and also the Budget later this year. Although this may indicate that any legislative measures on issues such as adequacy might be for a later parliamentary session – this would allow time for meaningful collaboration on a Roadmap. And of course there are other matters that don’t need a Bill in order to make further progress, such as the developing consensus on a plan for implementation of the Auto-Enrolment Expansion Act.
Other recommendations we would offer include specifically incorporating into the Pensions Review a number of key policy and delivery challenges that the pension system is facing now, and also those which will impact over the next decade (please also see our separate blog on the Bill).
In addition common themes we think will create successful policy solutions – for both the Pensions Review and the development of Pension Schemes Bill – include: a strategic approach to policy development and implementation planning; and a number of key safeguards to help steer policy development and delivery to ensure members remain at the heart of policy solutions. This will be key to secure strategic alignment across the pensions agenda and beyond, and to create clarity for business.
We look forward to inputting into the review over the summer and beyond – and working with government on these vital issues.
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