In his first King’s speech, Charles III today read out the UK government’s plans for the year ahead of the State Opening of Parliament. However, the pensions industry expressed disappointment as the speech failed to address pension reforms.
Aegon’s pensions director Steven Cameron said he was disappointed that the government didn’t include the Pensions Bill in today’s King’s speech.
“This is likely to be the last parliamentary session before the general election, and the current government has been consulting on a long list of initiatives. In the absence of a Pensions Bill, other routes will need to be found to advance these,” he said.
Cameron added that all eyes will now be on the autumn statement from the chancellor of the exchequer, which is due to be delivered on 22 November.
In July, chancellor Jeremy Hunt announced a number of reforms, dubbed Mansion House reforms, which were intended to unlock up to £75bn of investment from defined contribution (DC) and Local Government Pensions Schemes (LGPS) to boost UK growth.
Since then the government has been consulting on a raft of ideas to encourage such move.
The initiatives include a new Value for Money framework for DC pensions which will “shift the focus away from minimising costs to maximising value for members”, with schemes that are not able to deliver expected to wind up and consolidate into larger schemes which are more likelhy to invest in private assets.
There are also plans for extending a new form of collective defined contribution (CDC) pension which is likely to have longer investment horizons, making private asset investment more likely.
In addition, there have also been consultations on plans to solve the issues with multiple small deferred pension pots and to open up a wider range of ‘at retirement’ choices to members of trust-based schemes.
Cameron said: “While there’s no Pensions Bill to take these forward, we believe they remain government priorities and await clarity on next steps. We encourage the government to prioritise those initiatives with the greatest potential to boost retirement outcomes of individual members.”
Pensions Management Institute’s president Robert Wakefield said the most pressing unresolved issue at this time is the problem of finding an effective mechanism for the consolidation of defined benefit (DB) pension schemes.
However, he said that while Clara-Pensions “finally completed” its first transaction yesterday, it still remains unclear as to how public sector schemes might be consolidated.
”Speculation that the Pension Protection Fund (PPF) might be used as a consolidator remains unaddressed, and this is now unlikely to be resolved for at least another 12 months,” he added.
David Brooks, head of policy at Broadstone, was also disappointed at no mention of the Mansion House reforms or other “much rumoured” pensions legislation in the King’s speech.
He said: “With the autumn statement on the horizon, focus now shifts to Jeremy Hunt’s announcement in a couple of weeks to see how the sprawling package of reforms will proceed.”
He noted that with rumours around DB surpluses beginning to emerge as well as the existing raft of policy changes mooted on investment, consolidators, superfunds and small pots, it would be “peculiar if pensions were ignored again come 22 November”.
However, Becky O’Connor, director of public affairs at PensionBee, said that the omission of the Pensions Bill in the King’s speech implies that the chancellor’s Mansion House proposals might set the direction of travel but “lack a substantial commitment to how these changes will be made in reality”.
“Following the upcoming general election, the incoming government will encounter a myriad of crucial decisions, where neglecting attention to pensions poses the danger of leaving pivotal reform issues unaddressed, perpetuating a stage of limbo in pension policies,” she said.
Ahead of the speech, LCP’s head of pensions research at LCP said that a new Pensions Bill is needed if the government is to deliver many of its July 2023 Mansion House pensions policies.
He highlighted that there are number of issues that require a pensions bill, including:
- the establishment of a statutory authorisation and supervision regime for commercial vehicles offering to consolidate DB pension schemes, such as through DB superfunds;
- the establishment of a public sector DB scheme consolidator, which could be operated by the PPF;
- a new mechanism to incentivise DB schemes to undertake greater investment in productive assets;
- requiring DC schemes to offer decumulation services to their members;
- resolving the small DC pots issue;
- delivering the Value for Money framework for DC schemes, including empowering The Pensions Regulator to wind up schemes that do not meet expectations under this.
Read the digital edition of IPE’s latest magazine
No comments yet