- Focus on four themes: well-run schemes; effective engagement; adequate contributions; and consolidation
- Committees formed for defined benefit schemes, defined contribution schemes, local authority schemes and master trusts
- Expert Reference Groups established to provide support.
The Pensions and Lifetime Savings Association (PLSA)’s recently formed Policy Board has agreed a four-year work plan designed to support the PLSA’s mission to help everyone achieve a better retirement income.
Organisationally, the Policy Board has also now formed four new sub-committees of eight to 10 members each to help implement the work programme and ensure PLSA members from across the pension landscape inform the work. Representing the defined benefit, defined contribution, local authority and master trust segments of the industry, respectively, the four committees will inform the PLSA’s consultation responses, sit on industry working groups and support the PLSA in representing policy positions to government, regulators and stakeholders. They will also provide advice to the Policy Board on certain policy matters as requested by the Policy Board.
Additional Reference Groups comprising experts from relevant sectors of the PLSA membership will also provide support in developing PLSA policy positions by bringing more PLSA members into the foundation of the organisation’s policy work. The Reference Groups will usually operate in virtual form via email and survey. This wider, more inclusive approach is a further way in which the PLSA is implementing our OpenPLSA initiative. Members who would like to participate in the Reference Groups should contact firstname.lastname@example.org.
An ambitious programme of policy work for 2019-2022 focuses on four key themes: achieving well-run pension schemes, encouraging effective engagement, supporting adequate contributions, and addressing scale and consolidation.
The focus on well-run schemes recognises that good scheme governance goes to the heart of trust in the industry and the delivery of good outcomes for savers. As well as scheme governance this area covers cost transparency, value-for-money, sound investments, and stewardship.
Specific work areas include the Cost Transparency Initiative – a partnership between the PLSA, the Investment Association, and the Local Government Pension Scheme (LGPS) Advisory Board to implement new industry standards to improve transparency in investment costs and charges; and further work to help members implement new investment regulations that come into force on 1 October.
Achieving better retirement incomes for everyone requires savers to actively engage and understand the consequences of their pension saving decisions.
Work in this area will include developing Retirement Income Standards – quantifiable saving targets will help the industry communicate people’s likely lifestyle in retirement and help them understand the impact of savings decisions. The PLSA is also playing a proactive role in the development of the Pensions Dashboard and Simpler Annual Statements, so people have the tools to help them understand their savings.
Recognising that just 3% of those with only defined contribution pensions are likely to achieve the required pension income identified by the Pensions Commission, this theme includes increasing auto-enrolment contributions to 12% by 2030 while taking into account the affordability of higher contributions and widening the scope of automatic enrolment. We will also be introducing the new Pension Quality Mark Standards, which reward well-run schemes that offer 12% contributions.
The defined benefit funding regime will be another specific focus of the PLSA over the next four years. 2019 is set to be a particularly important year for DB funds with Parliament debating a new Pensions Bill which will give greater powers to The Pensions Regulator (TPR), and TPR itself will be consulting on a new DB Funding Code.
Scale and consolidation
The PLSA seeks to increase the quality and performance of workplace pension schemes. Large schemes tend to score highly on these tests, so the PLSA welcomes the current trend towards consolidation. However, smaller schemes may also deliver some or all of these benefits. So scale should not be pursued as an end itself.
Nevertheless, the PLSA is playing a major role in the development of defined benefit Superfunds, an idea pioneered in 2017 through the PLSA’s DB Task Force. We estimate they could increase security for 11m members.
Additionally, having played a part in the development of a strong authorisation regime for master trusts, the PLSA will continue to advocate for an effective regulatory regime to safeguard millions of auto-enrolment savers.
Emma Douglas, Chair, PLSA Policy Board, said:
“We have an ambitious policy agenda to ensure the UK regime for retirement savings delivers a better income for everyone. Drawing on the wide expertise of the PLSA’s Policy Board we have identified four key priority topics: well-run schemes, effective engagement, adequate contributions, and addressing the challenges of consolidation – with some actions for Government and some for the industry. I am looking forward to pursuing these goals.”
Nigel Peaple, Director of Policy and Research, PLSA said:
“Our policy work is designed to deliver the priorities of our Policy Board which is made up of PLSA members with expertise in all types of retirement provision – DB and DC, large and small, private and public. These priorities take forward the objectives identified in our 2018 Hitting the Target report for DC schemes and the earlier work of the PLSA DB Task Force. Key deliverables include our work on Retirement Income Standards, the Pensions Dashboard, DB Super Funds, and the DB Funding Regime. It also involves addressing the challenges and opportunities created by the growth of savers in our Master Trust members, and by the effects on our Local Government Pension Scheme members of the new asset pools.”
For more information visit the PLSA's website.
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