My first blog in January was titled ‘No More Normal’ – a title that now seems rather prescient. In retrospect perhaps we can say we should all have seen it coming but there can be few of us who anticipated the result of the EU Referendum or the US Election. The status quo has changed but to what is not yet clear. And you’d be forgiven for thinking there is no status quo in pensions any longer – a quick jog down 2016’s memory lane will explain why.
The title of my blog actually referred to the third report in our Understanding Retirement research series. It was the first market-wide survey of who did what and why in the first six months of the pension freedoms and showed that there’s no more normal when it comes to using savings at retirement. It underlined the importance of our proposal of a Retirement Quality Mark to help savers spot reliable products that are likely to work for them – something we launched in September and has already been adopted by Legal & General, LifeSight UK and Xafinity.
While pension freedoms started to bed down we were presented with the prospect of another revolution, this time in the form of the Government’s consultation ‘Strengthening the incentive to save’ – otherwise known as tax relief. It caused a furore and in the end the Chancellor decided to leave pensions tax relief alone – a very sound decision. Instead we were introduced to LISA, the Lifetime ISA, and next year we’ll see the first LISA products and how the under 40s choose to use them – alongside or instead of automatic enrolment.
Feeling breathless yet? There’s plenty more to come, this time in the world of defined benefit. In March we launched the Defined Benefit Taskforce to get to the heart of the issues affecting DB schemes. We knew it was needed but could not have known that in April the BHS debacle would start to unfold and that the British Steel Pension Scheme would hit the headlines as Tata struggled with its UK business. The problems facing both the British Steel and BHS pension schemes show that there’s a real need for a wide-scale review of the DB pension landscape and the Taskforce’s first report presented the first results of its research and analysis. The Taskforce will publish its recommendations at the PLSA’s Investment Conference in March next year in time to feed into the Government’s green paper. We want to safeguard savers by creating a practical framework for DB – without this we expect more schemes to fold and savers to face greater losses than necessary.
Meanwhile automatic enrolment bowled along – perhaps unfairly overlooked these days as the reliably diligent and quietly successful member of the pensions family. Next year will see the tiniest of UK businesses start to automatically enrol their employees. We know this will be the toughest test yet and that’s why we developed Pension Solution to help small businesses – almost 200 have made use of it so far. We’ll look to master trusts to help and master trusts themselves will be looking at the coming Pensions Bill which we expect to bring tighter regulation. The pensions dashboard will also take shape next year, offering savers a one-stop overview of all their pension savings. Together with automatic enrolment it has the potential to transform public perception of pension saving.
There’s no doubt 2017 will bring change to us all but if the past few years have shown us anything it’s that we have the talent and tenacity to rise to these challenges. On a personal note I will be tackling some challenges of my own as I undergo treatment for breast cancer at the start of next year. My prognosis is very good with a full recovery expected but I do anticipate being out of full circulation for a month or two. We’re extremely fortunate to have such a strong team at the PLSA – the Board, Executive Committee and the entire staff will ensure business continues as usual while I’m away … but I will be back and raring to go to deal with the challenges 2017 throws at us. I look forward to it! If you’ve any questions or queries in the meantime, please contact Julian Mund, our Director of Commercial Services who’ll be stepping in for me.
As 2016 draws to a close I’d like to thank you all for your support and to wish you all a very happy Christmas and best wishes for the New Year.