Mark Futcher, Partner and Head of DC, at independent consultancy, BW said: "Following the recent announcements on consolidation and megafunds, the Pension Schemes Bill sheds further light on the Government’s direction of travel. Encouragingly, the focus appears to be on putting more money in people’s pockets and providing clearer options at retirement - not simply consolidating for the sake of scale. Given that many workers will accrue up to five pension pots by the time they reach 68, any move to reduce fragmentation and improve retirement confidence is welcome. But reform must have member outcomes and fiduciary duty at its core. Many smaller, well-run schemes already deliver strong, member-focused results, and it’s vital that their value isn’t lost in the drive for consolidation. These reforms are a step in the right direction, but the real test will be whether they deliver better outcomes for savers - not just simplify the system.”
Responding to the UK Government’s release of the Pension Schemes Bill, Debbie Webb, Pensions Board Chair at the Institute and Faculty of Actuaries (IFoA), said: "The Pension Schemes Bill is an ambitious and significant step in facilitating change to the UK pensions system. We remain supportive of the Government’s efforts to improve outcomes for pensions savers and stimulate more growth in the UK economy. The Bill has many positive aspects, including rules that allow surplus funds in defined benefit (DB) schemes to be used to help members, employers, and the economy. It is positive that the Government recognises that trustees are best placed to make decisions on surplus. Stakeholders will need time to review the bill in detail, though we look forward to working with government and the Pensions Regulator to ensure that the requirements are clear, practical and scheme specific, but ensure members’ benefits are protected and avoid unintended consequences. We are also pleased to see progress through the Bill on numerous other issues. These include consolidating small defined contribution (DC) pots, introducing DC decumulation requirements and helping DC schemes to deliver value for money, as well as legislation to support the creation of superfunds. The IFoA believes that the foremost purpose of DC pension schemes is and will always be to provide good outcomes for members in retirement. With regards to provisions in the bill on pension scheme investment, the needs of pension savers should be the driving factor in investment decisions. This means government must balance the need for sufficient investment in growth assets with the associated risks and costs. Consolidation can help access economies of scale and improve governance but does not come without risk. Compulsory investment in certain sectors (such as unlisted UK assets) may expose schemes and members to higher investment risk, costs, reduced liquidity, and lower diversification.”
Calum Cooper, Head of Pensions Policy, Hymans Robertson says: “Today marks a seismic shift in UK pensions policy. The Pension Schemes Bill signals a bold, ambitious drive to unlock the untapped potential of pensions for national prosperity. In particular, by enabling the release of defined benefit surpluses and consolidating small pots, the government is laying the groundwork for a more efficient and growth-oriented pensions system. It's very encouraging to see today's accompanying Workplace Pensions Roadmap outlining such a clearly sequenced and phased approach. It balances ambition with pragmatism while at the same time acknowledging the need for agility in implementation. While the devil will be in the details, the angels lie in the potential for improved retirement outcomes and economic revitalisation. This is a pivotal moment to harness pensions as a force for good, delivering better retirements and fuelling UK growth. It’s a once-in-a-generation opportunity to align pensions policy with national prosperity. It lays some of the essential groundwork which would enable the realisation of our proposals, as outlined in The Untapped Potential of Pensions. These outline how unlocking the untapped potential in pensions could help with better pensions for people by removing barriers to adequacy by saving the Treasury and employers money, all while stimulating much needed investment in the UK. It could generate the £100bn a year that is needed for 3% economic growth and our net-zero transition - all essential ingredients for Phase 2 of the review - reassuringly now committed to happening shortly.”
Government launch new Pension Schemes Bill
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