2022 Queens Speech: What to look out for in pensions policy
06 May 2022
Katy Little, Parliamentary and Stakeholder Manager at the PLSA, captures 5 things to be on the look out for at the 2022 Queen’s Speech.
On 10 May, the Queen’s Speech will mark the opening of a new Parliament as her Majesty sets out the Government’s legislative agenda for the coming year. With the next General Election in 2024 not too far away, this session may well be the last big push we see from the Government in terms of driving forward major pieces of legislation. This blog sets out the top 5 things the PLSA wants to see, and will be looking out for, at the 2022 Queens Speech.
Automatic Enrolment (AE) 2017 recommendations
The PLSA has long been calling on the Government to improve savings among people who are currently are excluded from automatic enrolment (AE), by implementing the recommendations of 2017 AE review - to introduce pension saving on the first pound of earning and extending AE to 18 – 22 year-olds. The Government has committed to doing this in the mid 2020’s, however, we would argue the legislative basis for extending AE should be brought forward as soon as possible to allow for these changes to implemented in-line with the Governments stated deadline.
Pensions adequacy is a strategic priority for the PLSA year. With people not saving enough to have an adequate retirement we have set out a plan to increase contribution levels over the next decade:
- By 2030 we argue that employee/ employer contributions should be rebalanced to reach 10% overall.
- After 2030, contribution should raise to 12% overall (with an additional % being contributed from each group).
The 10 year timeline for increasing contributions sets out a long-term vision for improving pensions adequacy, not only to take into account the current pressures of cost of living, but, because it is imperative that the Government sets out, now, a clear timetable for employers and schemes so that they are able to meet future expectations.
The question of how people spend their retirement savings has been in the limelight recently with the Work and Pensions Committee’s accessing pensions inquiry. The PLSA’s Guided Retirement Income Choices calls for a statutory obligation on pension schemes to support their members at retirement with their decumulation decisions as well as providing greater access to products which can cater for their changing needs. We are expecting a call for evidence to appear from the Department for Work and Pensions on this topic, however, we believe that such a requirement on schemes would generate a stronger demand side for the comprehensive and sustainable solutions savers need, and would help put the information and expertise within the industry to best use for the good of the saver.
The push from Government to encourage schemes to direct greater investment into illquids, is the most likely bit of legislation we will see announced, not least because The Secretary of State for Work and Pensions confirmed the move at the PLSA’s ESG conference this year. This may well make up part of any “Levelling up” legislation. The Levelling Up White Paper, which was published earlier this year, also promised to work with Local Government Pension Funds to publish plans for increasing local investment, including setting an ambition of up to 5% of assets invested in projects which support local areas.
Private Members Bills
One thing to keep an eye on after the Queen’s Speech will be the Private Members Bill Ballot, whereby, backbench MP’s put their names forward to try and seize a chance at introducing some new legislation. There were 2 pensions related Private Members Bills introduced in the last session – one from Margaret Ferrier MP that looked at clarifying GMP legislation (which made its way onto the statute books) and one from Richard Holden MP on extending AE (which didn’t.)