After a landslide election win last night, the UK will be looking to Labour to advance key priorities within the pensions industry, including a promise to “review the current state of the pensions and retirement savings landscape”, as per the party’s manifesto.
Morten Nilsson, chief executive officer of Brightwell (former BT Pension Scheme Management, the asset management arm of the UK’s largest corporate defined benefit pension scheme), said: “A top priority for the new Labour government will be getting the planned pensions review under way.”
He said that it had been 20 years since the Turner Commission examined the regime for UK private pensions and long-term savings, noting that “while considerable progress has been made during that time, some major questions remain”.
Nilsson said: “For this review to be meaningful, it needs to be comprehensive and look at the system as a whole – both pensions policy and taxation and investment.”
He said that the Labour Party – which has returned to government after a 14-year absence after winning the general election – now has an opportunity to create an “over-arching, long-term vision of what the pension system is trying to achieve” and set a framework for reform that can underpin consistent policymaking and unlock greater value over the coming years.
People’s Partnership, a workplace pensions provider which provides The People’s Pension to more than 6.5 million people, has said it hopes the new government’s promised review of pensions will create a roadmap for the industry.
Patrick Heath-Lay, CEO of People’s Partnership, said: “A change of government is an opportunity to think creatively, with pace, about the future of pensions in the UK. I hope that Labour’s pensions review will help revitalise the consensus that drove forward the success of automatic enrolment and create a roadmap for the future.”
He noted that it was crucial that government and the pensions sector work constructively to enable greater pension fund investment in priority sectors, while “ensuring the interests of pensions savers are at the heart of decisions”.
He added: “There are also ‘day one’ challenges for the new ministerial team. The pensions dashboard programme is making progress, but ministers must address key project documents which still require approval, and this must happen quickly if larger schemes are to connect to the dashboards’ infrastructure in April.”
Before the election, People’s Partnership issued a four-point plan for fairer pensions for savers.
Steven Cameron, pensions director at Aegon UK, said: “The Labour government’s promised review of the pensions landscape could have far-reaching implications for all aspects of workplace and private pensions. To kick things off, we’re calling on Labour to set up an independent Pensions and Savings Commission within its first 100 days of office.”
He noted that with pensions being “such an important long-term savings vehicle for millions”, changes shouldn’t be rushed. “We need a well-thought-through, logically-sequenced reform agenda, and the pensions industry stands ready to support this.”
There is industry speculation that Labour will review the pensions tax system. Cameron warned: “Completing the regulations to abolish the Lifetime Allowance is particularly pressing. Labour is also coming to power with many of the previous government’s pension plans still under development. To allow progress, we need clarity on which will continue, change or be cancelled.”
Aegon believes the government’s first priority should be the planned enhancements to workplace pensions automatic enrolment, which has already received cross-party support and would boost pension pots for millions of employees.
Tim Middleton, director of policy and external affairs at the Pensions Management Institute (PMI), highlighted the many reforms required to the UK pensions system.
“Some, such as the new Defined Benefit Funding Code and changes to auto-enrolment, remain from the agenda of the previous government. Others stem from the Labour Party manifesto: the new government has committed itself to a review of the UK pension system, and we would greatly appreciate clarity as to what this review will address,” he said.
He also said he “look[s] forward to the appointment of a new pensions minister, who we greatly look forward to meeting in order to discuss the next chapter for pensions provision in the UK”.
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