Five ways to make it a pensions bill for savers, says PLSA | Pensions and Lifetime Savings Association

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Five ways to make it a pensions bill for savers, says PLSA

18 May 2016

Today the Government announced the Pensions Bill 2016/17. This Bill is an ideal opportunity for the Government to secure the success of automatic enrolment and pension freedoms; and lay down a sure foundation for a long-term savings policy in the UK to protect savers. Here are five ways the Government can make it a pensions bill for savers.

  1. Ensure stable pensions policy by establishing an Independent Retirement Savings Commission
  2. Safeguard savers from scams by removing transfer requirement on trustees
  3. Help savers make good decisions under pension freedoms by empowering trustees
  4. Ensure all savers in Master Trusts are protected by improving regulation
  5. Help defined benefit schemes by simplifying administration and GMP conversion

Joanne Segars, Chief Executive, Pensions and Lifetime Savings, said:

“Thanks to automatic enrolment, over six million people are saving in a workplace pension today who were not six years ago and pension freedoms have given people a sense of autonomy and possibility about how they can use their pension savings - but there is still work to do.

“For the millions of people saving through automatic enrolment we must make sure their money is working hard for them and is secure in strong and high quality schemes. For many savers who now want to make use of their hard-earned savings it seems pension freedoms bring as many questions as answers – and savers will be looking to schemes and providers for help.

“This Pensions Bill is an opportunity for the Government to secure the success of automatic enrolment and pension freedoms. As importantly, it should lay down a sure foundation for a long-term savings policy in the UK and establish a pension commission.”

Ensure stable pensions policy by establishing an Independent Retirement Savings Commission

56% of savers told us that following pension freedoms they feel more uncertain about what the future holds for their retirement and 53% said they thought the changes were introduced to chase votes1. Millions of people are now saving for a pension for the first time thanks to Automatic Enrolment (designed by the last pension commission a decade ago) and these savers should be given the confidence and encouragement to continue to save for the long-term.

A commission will help ensure savers’ long-term interests are at the heart of pensions policy and rebuild savers’ belief that they can save for their retirements today, confident the goal posts won’t be moved radically tomorrow.

Safeguard savers from scams by removing transfer requirement on trustees

Currently the law forces trustees to accept a transfer request even where it looks like the member requesting it is about to fall prey to a scam. It’s too easy to set up a bogus pension scheme and impossible for trustees to make sure savers steer clear of them.

The Pensions Bill should ensure that any scheme receiving a transfer would have to be listed on a registry of legitimate transfer schemes maintained by the Pensions Regulator. This would simplify matters for schemes. Protecting members would be much easier and members would still have the right to transfer – this is important if we are to ensure that members can transfer from a bad to a good scheme.

Help savers make good decisions under pension freedoms by empowering trustees

The majority of people approaching retirement under the pension freedoms do not intend to seek advice or guidance and many savers lack the confidence to shop around. In fact, the majority of savers told us they will look to their pension provider for support in making decisions.

The Pensions Bill should give trustees and providers powers to help savers spot good value products that are likely to work for them by signposting scheme members to products with a Retirement Quality Mark. Savers would still be free to make their own choices, while those who are unwilling or unable to make a choice would have their interests safeguarded.

When we asked savers who can now access their pensions through the new freedoms what they might do, they told us2:

  • 73% plan to contact their pension provider
  • 32% plan to contact a professional adviser
  • 52% plan to look online
  • 34% plan to use Pension Wise
  • 42% plan to ask family and friends
  • 34% plan to consult newspapers
  • 36% plan to ask their employer

Ensure all savers in Master Trusts are protected by improving regulation

Master Trusts are essential for delivering automatic enrolment, and are giving millions of savers a great deal. But there is a real danger that a small number of poorly-run master trusts could be putting savers at risk.

The Pensions Bill should grant power to the regulator to make sure all Master Trusts have strong financial backing and competent trustees. The Bill should also lay out a process that, should a Master Trust fail, it is clear how members would be moved without financial loss.

Help defined benefit schemes by simplifying administration and GMP conversion

Guaranteed Minimum Pensions (GMPs) are payable to employees of contracted-out defined benefit schemes. Their administration is complex and can be an obstacle to giving members the security of buyout.

The Pensions Bill should amend the Pension Schemes Act 1993 and clarify the legal process for conversion of GMPs to scheme benefits. This will help schemes pay member benefits in a more rational form while protecting the scheme members’ interests.

-End-

 

NOTES TO EDITORS:

We’re the Pensions and Lifetime Savings Association, the national association with a ninety-year history of helping pension professionals run better pension schemes. With the support of over 1,300 pension schemes and over 400 supporting businesses, we are the voice for pensions and lifetime savings in Westminster, Whitehall and Brussels.

Our purpose is simple: to help everyone to achieve a better income in retirement. We work to get more money into retirement savings, to get more value out of those savings and to build the confidence and understanding of savers.

Footnote 1

NAPF consumer research, April 2015. Further information available in ‘The case for an Independent Retirement Savings Commission’.

Footnote 2

'Pension Freedoms: No more normal’ part two of the PLSA’s ‘Understanding Retirement’ research programme.

CONTACTS:

Lucy Grubb, Head of Media and PR, Pensions and Lifetime Savings Association
T: 020 7601 1726, M: 07713 073023, E: [email protected]

Eleanor Carric, Press Officer, Pensions and Lifetime Savings Association
T: 020 7601 1718, M: 07825 171 446, E: [email protected]

Kathryn Mortimer, Press Officer, Pensions and Lifetime Savings Association
T: 020 7601 1748, M: 07901 007713, E: [email protected]