Comment | PLSA
2020 must see the government become bold on pensions
Nigel Peaple
Nigel Peaple is director of policy and research at the Pensions and Lifetime Savings Association
Usually, when we enter the final months of a year the furthest thing from our minds whilst we start to enjoy a mince pie or two is the prospect of a forthcoming general election. 2019, however, was anything but a normal year. So perhaps its best that we had planned for the unexpected. And it’s in those plans that we are challenging the new government to be bold in their decision making for 2020 and beyond, while ensuring that pension saving and engagement form a large part of future policy making. But we don’t expect them to make those changes on their own and, as is befitting an election pro- cess, the PLSA has launched its own policy man- ifesto urging the new government to do every- thing it can to help everyone reach a better income in retirement. We have broken it down to four proposals: – Adequate contributions: Increase automatic enrolment contributions
The new government must build on the suc- cess of automatic enrolment and increase con- tributions to 12% of salary by 2030 (split 50-50 between employer and employee).
– Effective engagement: Ensure pensions dash- board helps people set and achieve goals Savers’ engagement with their retirement sav- ings is too low. The new government should support the development of the pensions dash- board – that includes state pensions – ensuring the first one is non-commercial, has access to data and protects consumer information.
– Well-run schemes: Put in place the right fund- ing regime for defined benefit (DB) schemes,
backed with appropriate powers for the regula- tor to prevent reckless behaviour The new government should legislate quickly to give The Pensions Regulator (TPR) new powers to take action sooner, impose appropri- ate fines and have more oversight of risk corpo- rate transactions. TPR should also press ahead with its plans for a new code for DB schemes so it can set clear standards on pensions funding.
– Pensions and scale: Facilitate new large-scale schemes to protect savers and help employers Despite employer contributions of £400bn during the past decade, 3,500 DB schemes have a combined £188bn deficit and 3 million members have just a 50/50 chance receiving their benefits in full. The new government should take forward the proposals from its 2018 white paper to strengthen protection for savers by allowing consolidation and the crea- tion of superfunds to protect member benefits and create an incentive and achievable goal for employers to accelerate funding into schemes. The new government cannot allow pensions to become a back-burner issue. While pensions may always seem like a job for tomorrow, ensur- ing adequate contributions, fostering effective engagement and allowing well-run schemes to operate at appropriate scale must be the blue- print for making the greatest difference to the greatest number of savers. Together with the pensions industry, the govern- ment must be bold and seize this opportunity to help more people achieve a better income in retirement.
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14 | portfolio institutional | December-January 2020 | issue 89
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