COMMENT


Asuccessful year so far, but uncertainty remains


By Julian Mund


Despite some positive developments this year, there is still a significant amount of uncertainty over what the next few months have in store for the pensions industry


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ummer has been a good time for all of us to reflect on the year so far. We have had a chance to look back at the lessons


(and hopefully successes) we can learn from in the first half of the year. We can also look ahead at the challenges we can expect towards the end of 2019. There have been some exciting


developments taking place so far this year. The Pensions Regulator’s master trust authorisation regime went live and the Cost Transparency Initiative was launched in April. Add to that auto-enrolment figures passing the 10m mark and it has been a pretty hectic first half of 2019. If that was not enough, we


have also had a decision on the pensions dashboard agreed by the government. This is an important initiative that has the potential to help savers plan their retirement income. However, it will also present a challenge to the pensions sector – especially for smaller schemes with less sophisticated IT, and for defined benefit schemes, where there is a risk that new data will be required. But aside from all this progress


there has been a certain amount of uncertainty in the air. Politically and professionally there has been a lot of change. We have seen the introduction of the Money and Pensions Service, which will deliver greater pensions guidance, and a change in leadership at TPR. Furthermore, we are on our


second prime minister this year. A new Labour government – should they win the potential election – could implement


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everyone on their toes Julian Mund, chief executive, the Pensions and Lifetime Savings Association


With TPR consulting on the funding regime and ESG guidelines coming into force in October, the tail end of 2019 looks like it will be keeping


plans for the nationalisation of numerous utilities, which would have wide-reaching implications for the pensions industry as institutional investors. It almost goes without saying


that Brexit will be grabbing the attention in the coming weeks and months. However, there are other domestic issues that still need to be ironed out. The pensions bill was expected


this summer but, to date, remains unpublished. This therefore has to be a priority for reappointed pensions minister Guy Opperman, as it includes a number of important measures including requirements to connect to the pensions dashboard, a new authorisation and regulatory regime for DB superfunds, as well as new powers for TPR regarding the DB funding regime. Our Retirement Living Standards


will be published in October at our annual conference. Pitched at three levels – minimum, moderate and comfortable – the standards will help people get a better understanding of the amount they will need for their retirement for


different kinds of lifestyle. We are working with the government to show how valuable these standards are in helping people understand their retirement needs, and we hope it will incorporate themin the pensions dashboard. PLSA research shows that at a


contribution rate of 8 per cent, the majority of savers are unlikely to meet the Pension Commission’s target replacement rate. In our Hitting the Target


report, we proposed that the next government legislate for a gradual increase in auto-enrolment contributions to 12 per cent of salary by 2030 and move to a 50/50 employer/saver split. In this Brexit world, politically


this might be hard to deliver, but it is important that Boris Johnson and his government focus now on how to ensure people are saving enough, so everyone can enjoy as prosperous a retirement as possible. There are also a host of emerging


issues coming to the fore in 2019 and beyond. It is hard to escape reference to


the impact of climate change, and the pressures of it remain firmly on the agenda with pensions, evidenced by the protesters at our Local Authority Conference in May, as well as forthcoming government guidelines on environmental, social and governance factors. The role of trustees is firmly in


the regulator’s eyesight too, as it begins an in-depth consultation about their role and duties. Cost transparency is under greater scrutiny as well, not just from the Cost Transparency Initiative but from the Work and Pensions Committee. In addition, the Labour Party is proposing to focus on pension costs if elected. Furthermore, with TPR


consulting on the funding regime and ESG guidelines coming into force in October, the tail end of 2019 looks like it will be keeping everyone on their toes.


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