PI Partnership – Pensions Policy Institute


The Pensions Policy Institute has been at the forefront of an ever-changing pensions landscape since its creation 20 years ago, reveals Andrew Holt.

It is 20 years since the Pensions Policy Institute (PPI) was formed, making this an opportune moment to assess the important work the

organisation has

undertaken. Much has happened in that time. The analysis undertaken by PPI has become an important part of the pensions policy discussion and indicates just how much that landscape has changed over the past two decades. Looking back to 2001, the organisation was the brainchild of Tom Ross and his fellow members of the Pension Provision Group. The group established the PPI to undertake independent research, analysis and comment on pensions and other retirement issues. Since then, charting the developments over those 20 years highlights the chal- lenging pensions environment and the PPI’s impressive response on each test- ing turn.

Regular response For example, since its inception the PPI has published 130 major reports and 125 briefing notes. “We have responded annu- ally to government, regulator and indus- try consultations and presented evidence to Parliamentary committees,” says PPI director Chris Curry. “We have worked hard from the start to be a trusted voice in the pensions debate, relying not just on the quality and inde- pendence of our research, but also making sure that research is seen by policy makers and presented clearly,” Curry adds. Looking at the events of the past 20 years, one key moment early on was in 2003, with the publication of the PPI’s Guide to State Pension Reform, which was a road- map with a radical agenda.

40 | portfolio institutional | April 2021 | issue 102

The context of this was the pressure that had been building for the government to recognise that reforming state pensions is the highest priority in tackling the major retirement funding issues facing the country. Setting out the challenges, Alison O’Connell, director of the PPI at the time, said: “Reforming state pensions is the most important step in solving the grow- ing discontent with our pensions system. State pension benefits are the only income the poorest sector of the population will have to live on in retirement. But the state system is widely criticised for being com- plex and inadequate.

“It is widely thought that the policies underlying the system are unsustainable. And private pensions only stand a chance of flourishing if they can be placed on a secure foundation,” she added. This came after the creation of the Pen- sions Commission, announced in a pen- sions green paper at the end of 2002, to analyse the pensions system against the changing socioeconomic and demographic background and make rec- ommendations for reform.

What the commission did was publish several reports: its first was published in October 2004, setting out a detailed anal- ysis of the UK pensions system, followed by a second, published in November 2005, presenting its conclusions on the likely evolution of the UK pension system if policy remained unchanged, along with the commission’s recommendations for a new policy direction.

A final statement was published on in April 2006, detailing its response to spe- cific issues which had arisen in the debate on pension reform since publication of the second report. The PPI spent much

time analysing the minutiae of the com- mission’s proposals.

Changing state The issue of the state pension has there- fore been a regular source of thinking and debate, with pension ages undergoing radical changes since April 2010. These changes saw the state pension age rise to 65 for women between 2010 and 2018, and then to 66, 67 and 68 for men and women. Plans are afoot to change state pension ages further.

A 2018 PPI report revealed the impor- tance of the state pension: finding that while levels and sources of income vary across the older population, the state pen- sion is an important part of retirement income for all pensioners except the lucky few with the highest retirement incomes. For the poorest pensioners, £3 in every £4 (78%) of their income is paid by the state, rising to almost £9 in every £10 (86%) when state benefits are included, high- lighted the report.

Automatic pensions Another big and important issue was that of automatic enrolment, which was phased in from 2012, starting with the largest UK employers with the aim that all eligible workers should have been auto- matically enrolled in their employer’s workplace pension scheme by February 2018. A 2017 automatic enrolment review made recommendations on the age of eli- gibility and earnings band. “Automatic enrolment has been success- ful in encouraging mass participation in pension saving. The number of active pension savers – in the public and private sector – has grown from around 11 million in 2012 to around 19 million in 2018,” the PPI noted in a briefing note published in 2020. “It has also been successful in enrolling the group it was specifically tar- geting: employed lower earners.” Indeed, of all income groups, those earn- ing between £10,000 and £20,000 expe- rienced the greatest rise in participation

Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36  |  Page 37  |  Page 38  |  Page 39  |  Page 40  |  Page 41  |  Page 42  |  Page 43  |  Page 44  |  Page 45  |  Page 46  |  Page 47  |  Page 48  |  Page 49  |  Page 50  |  Page 51  |  Page 52  |  Page 53  |  Page 54  |  Page 55  |  Page 56