Today the Work and Pensions Committee released the final report of its inquiry into Pension freedom and choice. The report calls for a simple package of measures to create better informed, more engaged pensions savers. For less engaged savers a “default decumulation pathway” has been proposed for their protection.
In response to the report Nigel Peaple, Deputy Director DC, Lifetime Savings and Research, Pensions and Lifetime Savings Association (PLSA), said:
“We strongly agree with the Work and Pensions Committee’s proposals to introduce default pathways to help savers achieve good outcomes under the pension freedoms. One of the hardest problems we face is connecting defined contribution pension savers with suitable retirement income products. The report shows how it is possible to preserve retirees’ freedom to choose whilst applying lessons from automatic enrolment to connect savers directly with retirement income products.
“Parts of the report can be acted on quickly, and we believe that default investment pathways for non-advised drawdown should feature in the final report of the FCA’s retirement outcomes review. Furthermore, Independent Governance Committees (IGCs) or trustees should oversee any default arrangement.
“There are, however, other areas where more time is required. Such as specifying exactly how these products should work, what standards they should meet, and the means by which individuals should access a default or signposted product. The Australian Treasury recently consulted on these exact issues1 and we think a similar consultative approach to the retirement products market is necessary for the UK.
“As we said in our submission to the Committee, and in our Hitting the Target report, we believe a new regulatory framework is needed to support the Pension Freedoms. Under it, schemes and providers would signpost savers along default pathways to a suitable product or solution which would conform to Government mandated standards. These products would be selected by trustees or IGCs who have an obligation to act in the members interest.
“Regarding the Pensions Dashboard, the PLSA agrees that it can help people plan for retirement and that it should include all pensions. The timetable suggested by the Committee is very challenging and may not be achievable. However, we will not be able to assess the time required until more is known about the data to be supplied. We are pleased that the Committee has proposed that a Pension Dashboard be hosted by the Single Financial Guidance Body. The PLSA has long argued that there needs to be at least one public dashboard in order to provide a trusted source of pensions Dashboard data. Nevertheless, in the fullness of time, additional private sector dashboards should help achieve better member engagement, provided they are tightly regulated in the interests of savers.
“We look forward to working with the Work and Pensions Committee to help ensure pension savers find suitable retirement income products.”
NOTES TO EDITORS
1 The Australian Treasury: Development of the framework for Comprehensive Income Products for Retirement
ABOUT THE PENSIONS AND LIFETIME SAVINGS ASSOCIATION
We’re the Pensions and Lifetime Savings Association; the national association with a ninety year history of helping pension professionals run better pension schemes. Our members include over 1,300 pension schemes with 20 million members and £1 trillion in assets, and over 400 businesses. They make us 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.
Kathryn Mortimer, Press Officer, Pensions and Lifetime Savings Association
T: 020 7601 1748, M: 07901 007 713, E: [email protected]
Eleanor Carric, PR Manager, Pensions and Lifetime Savings Association
T: 020 7601 1718, M: 07825 171 446, E: [email protected]