There is increasing dissatisfaction among pension professionals over the direction of UK pensions policy, according to a survey conducted by the Pensions Management Institute (PMI).
The research found that more than six in 10 (61%) of pension industry respondents are dissatisfied with the direction of pensions policy in the past six months, substantially up from 44% of respondents who expressed dissatisfaction last year.
Tim Middleton, director of policy and external affairs at PMI, attributed this increase to a number of factors.
One of them is “governmental confusion”, Middleton pointed out, highlighting Liz Truss’ 44-day prime ministership; Guy Opperman, former pensions minister, resigning, getting reappointed and leaving again; and Alex Burghardt’s brief stint as pension minister before Rishi Sunak took over as prime minister and reshuffled the cabinet and appointed Laura Trott into the role.
As a result of this confusion, Middleton said there was a period when there was “very little in the way of direction”.
There were some very specific issues that affected pensions towards the end of last year, Middleton said, that caused “real problems”, including the liability-driven investments crisis, which 48% of industry professionals blamed government for.
Middleton said that PMI members also felt that The Pensions Regulator (TPR) was “slow in presenting an effective and meaningful response” to the crisis, with 44% expressing dissatisfaction over its actions.
Middleton pointed out that two “key figures” have recently moved on from TPR, with former executive director of regulatory policy, analysis and advice David Fairs leaving in mid-March and former chief executive officer Charles Counsell also recently stepping down.
“When you lose two prominent figures at the same time” concerns are raised about continuity and what the implications are for the general direction of the policy going forward, Middleton said.
Another factor, he added, was the “inevitable” delay to the launch of the Pensions Dashboards Progamme in April despite “much emphasis on the launch” from the government.
He said: “Everybody knew it was going to happen and, inevitably really, but quite late in the day, there was an acknowledgement that this wasn’t going to work properly. If it would have launched it would have gone horribly wrong, and the general public would have lost all confidence in the integrity of the whole concept.”
He added that the government “did the prudent thing” in the end and decided to defer the launch. “That’s logical – I would far rather that the pensions dashboards is like Crossrail than like the Titanic. It’s far more important that we wait and get it right rather than try to do it quickly.”
Middleton noted that “all of these factors are combined to say our membership takes a rather dim view of the general direction of policy and of the effectiveness of TPR”.
Direction
When it comes to direction of travel for pensions policy, Middleton has faith in Nausicaa Delfas, CEO of TPR, and Trott’s ability to improve the sector’s confidence.
He said: “[Delfas] has not been in post very long and she clearly has done a lot of preparation. The early signs are that she’s going to be very hands on, very productive, and that’s very encouraging.
“Similarly, in terms of the minister, we haven’t seen much of her yet, and she has been out of the public eye familiarising herself with the requirements of the role. It’s important to remember that Opperman was the longest-standing pensions minister we’ve ever had so we’d got used to him; he’d got used to his role. Bringing someone new is always going to be a little bit disruptive initially.”
Middleton commented that both Trott and Delfas will likely “pick up some of the key themes” including merging “all the different codes of practice” into one single document, funding code for DB schemes, and automatic enrolment being finally enacted.
Scope
While PMI’s dissatisfaction figures are now high, Middleton said that this could change if Delfas makes an effective start to her role in office, adding that it could “do much to improve the industry’s confidence in the direction of pensions policy”.
He continued: “Laura is still very new to the role, so some effective policy initiatives from her would restore confidence. Things might look grim now, but there is plenty of scope for things to improve over the second half of the year.”
Reaction
A spokesperson for TPR said: “We have set out an ambitious agenda to make the pension system the best it can be, and we look forward to working with our partners across the pensions industry to drive innovation and protect savers. Where issues arise, we are always keen to listen and learn.
“The pace of change in pensions shows no sign of slowing, and so we must all adapt. We need to do this so that pensions deliver a pot that enables savers to have confidence, empowerment and security in later life.
“We are committed to driving up value for money in the pensions market. We will evolve our regulatory approach accordingly, and we will seek assurance from the industry that this is being delivered.”
Read the digital edition of IPE’s latest magazine
No comments yet