Gail Izat, Managing Director for Workplace and Retail Intermediary at Standard Life, part of Phoenix Group said: “Hot on the heels of the Pension Investment Review we have the Pension Schemes Bill. The Bill builds on the government’s push for greater scale in DC savings and emphasis on value for money. Enabling providers to consolidate savers into their primary default funds will be an important catalyst in delivering the government’s ambitions of DC mega-funds. Many providers already invest at scale but this approach will consolidate the number of default funds and help deliver greater efficiencies on behalf of savers. In a number of important ways, the Bill looks to address some of the unresolved issues that emerged following the landmark auto-enrolment and pension freedom reforms. The proliferation of small pots has been a consequence of both auto-enrolment and the modern job market and consolidators will step in to bring together pots below £1,000. The detail and commercial model of this system will require considerable thought. It was good to see a reference to delivering on pension dashboards too as they will play a vital role building people’s connection with their pensions. Pension freedoms have given people the ability to take their money as they see fit and research shows people value this ability to choose. However, it leaves people having to make significant decisions about how long they might live, where to invest and how much income they can afford to take. The introduction of Guided Retirement Options has the potential to be one of the most significant things the industry could do to ensure people are supported to make the most of their money. The initial focus here is on trust based schemes where there is a real mix of support at present, but the customer need applies across the board. It was interesting to see government reference longevity protection in their announcement as we believe having a degree of income certainty is vital when helping to manage essential expenses in retirement. The value for money framework will enable people to compare schemes on a number of metrics including service quality and investment performance - not just costs and charges. There is still some detail to work through around how service targets are quantified and how the framework will apply to multi-employer schemes but ultimately a policy that helps people transfer from poor performing schemes into better ones should be welcomed. In combination these policies place the focus for the industry firmly on scale, value for money and better engagement for people with their savings. They draw on lessons we’ve seen from other global pension systems where these levers have been used to deliver better outcomes for savers.”
Yvonne Braun, Director of Policy, Long Term Savings, at the ABI said: "This wide-ranging Bill is set to usher in the most large-scale pension reforms since auto-enrolment. The details will be crucial and we will scrutinise the Bill to ensure it puts the interests of savers first. We also urgently need to tackle the level of pension contributions which are too low to create an adequate retirement income for many. We urge government to set out the details of its adequacy review as soon as possible."
Steven Cameron, Pensions Director at Aegon said: “There’s a huge amount to be welcomed in this blockbuster of a Pension Schemes Bill. After months, and in some cases years of debate and consultation, the Bill paves the way for a brave new world of workplace pensions. The Government is rightly highlighting the benefits scheme consolidation and a new approach to pension scheme investments can bring to the UK economy. But the real litmus test must be to make sure the changes deliver tangible benefits for the millions of individuals saving for retirement. Savers will have the assurance that workplace pensions are consistently offering value for money, with a strong focus on good investment returns. They’ll be able to access pension dashboards to see all their pensions in one place, while having small pots (under £1000) they’ve left behind when changing jobs brought together. The ambition for all schemes to offer their members clear default retirement options will be helpful for some, but mustn’t discourage individuals from engaging fully to make the best decisions for their own personal retirement. There’s a huge amount of change here, with many inter-connections, which will require several years of careful planning and implementation. The Government has promised to set out its intended timeline, which will be key in helping both providers and scheme members plan ahead.”
Patrick Luthi, CEO of now:pensions, comments on the Pension Schemes Bill: “now:pensions have been campaigning on small pots for a number of years, and we are pleased to see measures to deliver the ‘multiple default consolidator’ solution included in the Bill. Measures to support members at retirement are welcome – but it’s vital that they work for all member segments, and that the risks of placing members into default solutions are addressed. We look forward to seeing the details which will be crucial to supporting members in an efficient way.”
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