Pensions - Articles - Kevin LeGrand: OFT's Workplace Pensions Market Study

 In response to the launch of the OFT’s Workplace Pensions Market Study, Kevin LeGrand, head of Pensions Policy, commented:

  

 “A key issue for getting employers and employees to engage in the pensions system is to rebuild confidence. Pension provision is at a low level and we support any appropriate steps to improve future prospects for workers, however we would urge the OFT to be careful in the way it approaches the issue and communicates its intentions with this study. It would be very easy for this to be interpreted as an indication that pensions are broken, giving people further excuses not to contribute to a pension. We have seen such an attitude in response to the changes in the state scheme this week, turning what should have been largely a Good News story into one where the negatives take centre stage.

  

 “There should be a focus on defined contribution schemes, as in reality that will be the main provision basis for the foreseeable future, but if the OFT is to really investigate the value for money for pension savers, the “size of the pension pot at retirement” is too narrow a remit which should be widened to also include decumulation options, particularly annuities. At the moment the study appears to omit a crucial aspect of the defined contribution benefit – the use of that pot to provide an income in retirement. The crucial thing is retirement income, and not the capital sum at retirement – this focus on the pot size is misplaced and effectively a distraction from the key issue.”