PMI Crest
PMI
Looking for the silver lining
13 November 2020

Looking for the silver lining

A question that we see regularly in the pensions press is what pensions policy or legislation the industry would like to see over the coming 12 months? The answers are always varied – we all have our own shopping lists – but there are always more ‘wants’ than parliament or regulators have the time or inclination to deliver on.

Reflecting on the current environment, the next few years are likely to be even more challenging. The clear message from politicians, civil servants and regulators is that, more than ever, there is a pecking order in what gets attention. And pensions is not at the top.

  • Priority 1 is clearly Covid-19. With implications the likes of which the world has never seen outside of world wars, it is the defining challenge for a generation.
  • Priority 2 is Brexit. It was the highest priority for the country before the pandemic, and we were already seeing other issues taking a back seat.
  • Priority 3 has to be critical legislation. A Finance Act to implement a Budget is an obvious example, perhaps legislation covering health, policing or defence.
  • Where does pensions fit into this? At Priority 4 or below.

If the industry’s requests need to be moderated even more than normal, what should we be calling for and why? In my view, it’s things which make a material difference to member outcomes, which don’t need an enormous effort, which have broad support (in industry and parliament) and which play well to the public. So, what might they be? My list includes four items:

  • Final regime for defined benefit (DB) consolidators. Consolidation could be a game-changer, but only if the arrangements are right. Time is running out for many schemes and members
  • Collective defined contribution (CDC) for Master Trusts. The Pension Scheme Bill opens the door, but regulations are needed to make this come alive. As an alternative to defined contribution (DC), it could be of huge benefit to savers
  • Auto-enrolment (AE) review. AE has been an unequivocal success, but 8% is not enough and the practicalities are a nightmare. An upward nudge and simplification is what is needed next
  • Dashboard-enabling regulations. The dashboard is important and, if carrots don’t work, need to be used.

Of course, I have a longer list and each of you will have your own favourites. But if we all ask for different things the risk is that we get none. Whatever the final shortlist, beyond that I suspect we will be faced with a ‘make do and mend’ approach, where the industry lives within its means and existing legislation.

Of course, that also comes with a positive. If there’s one thing the pensions industry loves to complain about it’s dealing with very long-term savings within a legislative environment that is constantly shifting. If we get that stability, at least for a few years, then perhaps that’s a silver lining.

Notes/Sources

This article was featured in Pensions Aspects magazine November/December edition.

back to Pensions Aspects Magazine

Last update: 27 January 2021

Paul McGlone
Paul McGlone
Aon
Partner

Trustee Services Administrator

Salary: £20000 - £30000 pa

Location: Leeds, West Yorkshire

Senior Pensions Administrator - DC

Salary: £26000 - £34000 pa

Location: Berkshire

Deputy Pensions Administration Manager

Salary: £30000 - £35000 pa

Location: West Midlands

You may also like:

Engaging with fund managers to deliver better ESG outcomes
05 March 2021

Engaging with fund managers to deliver better ESG outcomes

Voting and engagement are crucial aspects of responsible ownership and valuable tools for encouraging companies to adopt better standards of corporate governance and management of Environmental, Social and Governance (ESG) issues. Here, River and Mercantile’s Ajeet Manjrekar explains how fiduciary managers can support trustees to meet their regulatory obligations by challenging and influencing underlying fund managers’ behaviour and policies.

Read more
Reporting on Dalriada Trustees’ first year as a PRI signatory
05 March 2021

Reporting on Dalriada Trustees’ first year as a PRI signatory

Dalriada Trustees became a signatory to the United Nations Principles of Responsible Investment (PRI) in September 2019, the first Professional Trustee firm in the UK to do so. Over the last year or so we have been working to better incorporate Environmental, Social and Governance (ESG) factors both within how we undertake our role as trustee and in how we operate internally.

Read more