Keeping long-term focus amid short-term noise | PLSA
Keeping long-term focus amid short-term noise

Keeping long-term focus amid short-term noise

19 October 2022

Against a backdrop of market volatility, which splashed pension funds to the top of news agendas, trustees, managers and PLSA members met in Liverpool to focus on the issues that will matter for them in the long-term, after the public gaze has moved on.

Success is often all about timing. In the auditorium of the ACC Liverpool last week, attendees at the PLSA Annual Conference marvelled at how the event fell squarely into one of pensions’ biggest moments in the spotlight.

Following a mini-budget rocking gilt markets, an LDI-driven tailspin and subsequent intervention by the Bank of England, the scene was set for a busy, retirement-theme-driven week.

Add into the mix a newly-appointed Pensions Minister appearing and a departing TPR Chief Executive on the bill, and attendees were right in the middle of the action.

However, PLSA members – trustees and service providers alike – know that in pensions, the focus needs to be on the long-term.

Steve Webb, Partner at LCP and former Pensions Minister, outlined in the conference’s opening panel, that while defined benefit schemes would emerge bruised and scarred from the current market events, the prospect for DC and its savers, was a much greater challenge.

Adequacy, adequacy, adequacy

While automatic enrolment, the 10th anniversary of which is celebrated this year, has been an undoubted success, the next task is clear.

PLSA Chair Emma Douglas noted that 19.4 million people in the UK were now saving for a pension – 40% more than 2012 – within a system built on “consensus and collaboration”.

Yet, some 51% of them will not achieve the target replacement rate set by the Pensions Commission, with just 28% facing even a moderate living standard.

These figures are notably poorer for the “under-pensioned” groups, including women and ethnic minorities.

A focus on ensuring that people have enough to retire on was the underlying theme of the PLSA Annual Conference.

With a cost-of-living squeeze exacerbated by soaring inflation, the conference opened with a selection of voices from the Liverpudlian public assessing how comfortably they might be able to retire.

It was clear from these voices that the public is beginning to understand the challenge it faces, but more is needed to engage people on how to achieve what they need in retirement.

In a session dedicated to the topic at conference, Standard Life research revealed some 25% of UK workers did not know how much they contributed to their pension each month, with younger members the least likely to know this figure. Additionally, some 20% did not know they were able to increase contributions, which may help them build up enough to retire more comfortably.

To help workers with this tricky balancing act of saving and spending, the PLSA is running the UK’s first ever Pensions Engagement Season over the next six months. Initiatives will explain the options and outcomes for savers, including tax relief, investment potential and how the cost of living is likely to continue to climb.

Already, some 35 million people have savings with providers that are using the PLSA’s Retirement Living Standards, CEO Julian Mund told conference. These give them the clearest picture of what life will look like and how much it will cost them.

Build it and they will comE

Vital to this understanding becoming universal, however, is clear communication of savings, benefits and expected outcomes. The Pensions Dashboard, a project almost ready for launch after years of work, is set to deliver on these promises.

A keen topic covered at conference, attendees heard from experts about the latest steps they needed to take on this online journey, before it bursts into action.

This digital theme continued, exploring how pensions are preparing for an online future, noting that the area of risk needs much more attention, with just 22% of schemes telling a survey at conference that they had risk register documenting cyber risks in place.

Around conference

Small pots, DB funding, annuities and even captive insurance options appeared on the agenda this year, along with sessions looking at the macroeconomic landscape, investment opportunities and, of course, sustainability.

The Pensions Minister himself, also admitted that his three weeks in post had dispelled the idea that the industry was “boring”, and he urged attendees to heed the message of engagement and adequacy, and take it to their schemes and members.

The first rap ever dedicated to pensions, launched as part of the PLSA’s latest campaign, summed up the overall message of conference and our daily work with schemes:

“Invest in yourself, later you will have the protection,” said Big Zuu to PLSA and scheme members.

We know that by staying current, relevant and connected to our members, we can work together to achieve our sector’s objective: to help everyone achieve a better income in retirement.

It is what the PLSA has done for 99 years, and we look forward to continuing to bring the industry together for more debate, collaboration and tangible action.

The PLSA Annual Conference took place on 12-13 October. For more information about the conference, speakers, sessions, and to watch sessions online, visit our website. For more information about our upcoming events or ongoing campaign work, please get in touch.

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