In our Manifesto, Pension Possibilities, we called on government to set up an Independent Retirement Savings Commission – an advisory, non-legislative body that would monitor the evolving pensions and savings landscape on a standing basis and make recommendations to the government of the day on future policy direction. We believe this is the best way to ensure that when it comes to pension policy, eyes remain focused on the long-term, on the overall savings landscape rather than its constituent parts and, fundamentally, on the interests of savers.
Ultimately, the rationale for having a Commission is to create greater stability and certainty around the big issues on the horizon for pensions, so that savers, pension schemes and the industry as a whole can have confidence in the direction of travel of pensions policy and can act accordingly.
The Commission would define target retirement outcomes, measure progress towards them, make recommendations for change and provide impact assessments of government proposals for change. It would take an open and consultative approach to its work, gathering information through wide-ranging research and consultation with stakeholders representing the wide spectrum of interested parties – industry, business and savers, as well as economists and other independent experts. It would not just focus on pensions but would consider wider related issues, including health, housing and living standards in retirement, within a framework of providing long-term stability for the industry and savers alike. It would be accountable to Parliament and the Secretary of State for Work and Pensions, with a remit to report to government on an annual basis, providing an assessment of the adequacy and affordability of the UK pensions system and making recommendations for change as and when necessary.
We envisage this Commission building on the success of the Pensions Commission led by Lord Turner ten years ago, which set in train the process of automatic enrolment that has been hugely successful to date, meaning that historic numbers of people are now saving into a pension. This did not happen overnight but was the result of extensive consultation, analysis and consensus-building between stakeholders representing the wide spectrum of interested parties. We hope to build on that success, and the spirit in which it has been achieved, as we encounter new opportunities and challenges in the future.
Looking ahead, there are a number of important questions future governments need to address – what a “good” retirement outcome looks like, how to ensure people are saving enough to reach it, how future demographic and longevity trends will affect the level of the State Pension and the age at which it is paid. None of these questions have easy answers, but it is extremely important that we get the answers right, or we risk undermining the welcome and significant progress we have made so far. Working with government the right Commission, with the right remit, can help ensure future Ministers have access to high-quality, impartial and independent advice in shaping pensions policy for the future.