Pensions - Articles - Resurrecting pensions for millions of private sector workers

Lauren Branney, Head of CDC at Hymans Robertson, says: “This is a major moment for workplace DC pension savers. Retirement Collective Pension Schemes (RCPS) can deliver a secure income for life in retirement, which our research tells us members’ welcome.  While there are trade-offs in relation to flexibility and leaving a legacy, the chance to deliver a higher income in retirement is an opportunity that will work well for many, especially with the retirement income adequacy challenge we see today for DC savers. Coupled with Guided Retirement the industry now has the means to harness the power of scale in delivering a default savings solution for DC members all through retirement.  Flexibility and choice is important and will be retained under the new regulations. But by empowering trustees and pension providers to deliver an income from DC as a default it removes the difficult decision-making burden from savers while retaining choice for those who prefer a different approach. Communication and engagement will remain as important as ever and the industry will need to work hard to get the design and delivery model right to operate at scale across workplace pension schemes.The prize is worth it and coupled with the launch of multi-employer whole-of-life CDC schemes next year the future looks far brighter for savers not part of the DB pension world. We look forward to engaging with the RCPS consultation and helping shape a framework to deliver good outcomes for members.”

 

Madalena Cain, Deputy Chair of the SPP’s DC Committee and a member of the DWP Guided Retirement Delivery Group, said: “Pleasingly, the government has already engaged considerably with the pensions industry on guided retirement. The consultation launched today is the next step in that engagement process and ensures that everyone has an opportunity to highlight potential challenges, offer solutions and help ensure DC pension savers can convert their savings into a sustainable retirement income without having to make complex financial decisions at and throughout retirement.”

Minister for Pensions Torsten Bell MP said: “Private sector workers deserve a much better deal when it comes to pensions. They are doing the right thing and saving for retirement, but when they get there too many are left without a genuine pension. We are resurrecting proper pensions for private sectors workers, guaranteeing them the option of an income that last throughout retirement and in many cases protection against the rising cost of living - things public sector workers take for granted. We are going to give pensions back to the people who are working hard and saving for their retirement.”