Pensions - Articles - Conservative leadership contest may slow pensions progress

As Theresa May steps down as Prime Minister on 7 June, Aegon is warning of possible further delays to important Government policy announcements on pensions and social care.

 In preparation for Brexit legislation, the Government ‘skipped’ last year’s Queen’s speech, the formal mechanism for announcing the government's legislative priorities. But with Brexit clarity no closer, and as we move to a new Prime Minister, it may be Autumn or later till the next Queen’s Speech. The official line from the pensions minister is a pensions bill will be delivered this year, but the lack of time will make this very challenging, with implications for pension dashboards, Collective Defined Contribution schemes and changes to protect members of defined benefit schemes. In addition, the Chancellor has indicated a delay to his planned comprehensive spending review as a ‘deal or no deal’ outcome will have huge implications for tax and spending decisions on crucial topics such as social care. 

 Steven Cameron, Pensions Director at Aegon comments:“As well as dividing the nation, Brexit has taken up so much Government time that key social policy initiatives have been put on indefinite hold. Further hiatus has been sparked by the Conservative leadership battle and with little time for Mrs May’s successor to come up with a Brexit solution, the situation is unlikely to improve any time soon.”

 On Pensions: “We had hoped for clarity on Government priorities in a Queen’s Speech this month, including a Pensions Bill to advance legislation around Pension Dashboards, which will benefit pension savers by offering access to information on all of their private, workplace and state pensions through a single online portal. While work continues ‘behind the scenes’, legislation is needed to compel all pension schemes and providers to make available the necessary information as otherwise, people will not have a full picture. Delays to this much-needed online snapshot of their current pension provision could stall people from taking advice on the action needed to get them on track for the retirement they aspire to.

 “The Pension Bill was also expected to advance a new form of Collective Defined Contribution scheme. Initially, it is only the Royal Mail which plan to offer this, so a delay here has much more limited impact. In fact, with the CDC concept proving highly controversial, its detractors could argue a delay provides more time to explore and address concerns.

 “The third likely delay is to protections for members of defined benefit schemes including new penalties for employers and company directors who break the rules, new powers for the Pensions Regulator and new provisions for ‘superfunds’ set up to allow smaller DB schemes to become part of a larger entity.”

 On Social Care: “The Government has still not delivered its repeatedly delayed Green Paper on social care funding. With an increasing number of us facing the prospect of needing social care in later life, the Government needs to put in place a stable and sustainable way of sharing costs between the state and individuals, based on their wealth. Importantly, this must be fair and accepted as fair across generations and wealth bands as well as avoiding the current geographical lottery.

 “While it’s great we’re enjoying longer lives, this inevitably comes at a cost. We urgently need an open debate around how to meet the costs, including the potential for increased taxes, which needs to be considered as part of the Chancellor’s delayed comprehensive spending review. Individuals must then have a clear understanding of what they’ll be expected to pay should they need care, ideally with an overall ‘cap’ on care costs so that they can start planning ahead.”

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