The Workplace Retirement Income Commission (WRIC) report issued yesterday has drawn mixed responses from industry figures and commentators.

Many believe that the report led by Lord McFall offers a valuable insight into the current private pension system and the shortfalls within it, clearly outlining the need for a more simplified system with greater communication, less risk and the need to address poor adequacy.

However, the report has also been criticised for not offering creative solutions to the problems and for its failure to completely comprehend the seriousness of the situation affecting the pensions industry.

Reacting positively to the report, Barnett Waddingham consultant Malcolm McLean said: “It is good that amongst other things the Commission has recognised the need to simplify pensions and with it the often arcane language that attaches itself to them.

“The case for good member communication about the workings of their scheme without the use of jargon or other unintelligible language and with upfront transparency about fees and charges can hardly be over-stated as we move increasingly forward in to a defined contribution (DC) world.”

McLean added that people would be more likely to save if “better than average” pensions were available to them.

President of the Society of Pension Consultants Kevin LeGrand also emphasised the usefulness of the report in highlighting the complex nature of the pension system and for underlining the points that need to be addressed around DC schemes such as risk.

“The issue of risk sharing is a critical one; Pure DC, combined with commercial forces and confusing, and often poor communication, is not a recipe for successful pension provision.

“Simplification of the state scheme and the creation of the new permanent Independent Pensions Commission remain key priorities and we urge the Government to move on these as soon as possible.”

JLT Benefit Solutions consulting director Paul Armitage also supported most of the conclusions from the report. He said: “The investment risk inherent in DC schemes needs stronger central governance as members are largely ill equipped to make asset allocation and manager selection calls, and default funds should focus on providing this for members with clear communication, transparency and at fair levels of additional cost.”

The Confederation of British Industry’s director for employment Neil Carberry said: “This report rightly identifies the need to do more to boost savings for retirement, and makes some helpful recommendations about how to build a culture of saving in the UK.

“The way to drive a change in the savings culture is for employers to have more freedom to design schemes that work for them and their employees. That means simplifying rules and fostering greater employee engagement with pensions, not top-down solutions.”

In line with LeGrand, Buck Consultants managing director Fraser Smart agreed that there was a need for a permanent Independent Pensions Commission. Smart commented: “The implementation of pension reform will be a complex process, in need of scrutiny and control, and it would be wise to take this responsibility away from our adversarial political system, which is not suited to taking appropriate decisions on the diverse matters illustrated in the WRIC report.”

Smart emphasised the fact that although workers might have pensions set-up, they are not taking an “active interest” in the progress of their pension pot.

Despite the report addressing some of the key problems, Smart pinpointed some of the areas which need improving not outlined in the report. He said: “Many employers need to become stronger advocates of their pension scheme; this can be achieved through the use of tax incentives in order to defer pay by contributing to the scheme, rather than paying out as cash remuneration.”

Also offering advice away from the report, director in the pensions practice at PwC Ed Wilson added: “The focus needs to be on removing the barriers to saving, and not just saving for retirement. It’s clear the employers of choice are looking beyond traditional pension provision to ways they can help staff save more generally and reduce debt. The message should be save for yourself rather than just your pension.”

Director-general of SAGA Dr Ros Altmann questioned some of the Commission’s advice stating that “[Lord McFall] suggests charge caps to ensure lower costs, but that was tried with stakeholder pensions and failed miserably. To make private pensions fit for purpose, we firstly need to radically overhaul state pensions and get rid of mass means-testing and then we need to radically overhaul private pensions to ensure that they fit with people’s lives.”

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