Industry experts divided on need for a new Pensions Commission

Industry experts are divided as to whether a new Pensions Commission is needed amid adequacy concerns and pension saving gaps, evidence in the Work and Pensions Committee's (WPC) inquiry has suggested.

In an evidence hearing for the third and final part of the committee’s inquiry, WPC chair, Stephen Timms, noted that witnesses have shared “contrasting views” as to whether a new Pensions Commission was needed, 16 years after the last one.

Age UK head of policy, Christopher Brooks, for instance, acknowledged that flaws are emerging in the pension system, with some gaps where there are under-pensioned groups and where the system is not working quite as well.

“Like any system, any institution, it needs to be flexible and adaptable. We need to think about how it can change to best meet future need," he said. There is definitely scope for change.”

However, Brooks clarified that he was “not convinced” whether a commission was needed, emphasising that the previous commission was undertaken amid a 'perfect storm' of pension concerns, at a “perfect time to get the wider buy-in from employers’ unions, industry and across the political spectrum”.

In contrast, Prospect Union senior deputy general secretary, Sue Ferns argued that there was a case for a new Pensions Commission to “set the pace on pensions policy for the decade ahead".

“The truth of the matter is that we have gone from a situation where millions of workers have had no occupational pension to one now where millions of workers have an inadequate occupational pension,” she continued. “That is not just a matter of tweaking existing arrangements. It does require some more fundamental action.”

In particular, Ferns suggested that, in terms of an agenda for a new Pensions Commission, there should be a particular focus on pensions provision for the self-employed, highlighting this as "a major issue", that might not have an easy solution.

In addition to this, Ferns suggested that whilst the gender pension gap “isn’t even on the agenda in the way that it should be now”, a Pensions Commission could really focus attention on that, as pensions inequality is a key component of inequality in society generally.

International Longevity Centre UK senior economist, Sophia Dimitriadis agreed, suggesting it would be “useful” to have an independent ongoing pension commission potentially making recommendations every five years, which could sit alongside the state pension review and potentially every year have a statistical piece on the state of the nation.

"The key reason we would call for this is that trends change quickly," she explained. "Look at the labour market changes, which are very relevant in terms of thinking about pension savings.

"We are not where we want to be. I think many of these changes might be building on the success of automatic enrolment. They are very complex. We are probably not going to change them overnight, so I think having that ongoing independent pension commission could be really supportive.”

Indeed, Financial Inclusion Commission commissioner, Laurie Edmans, also suggested that “if there is one thing that came out of this inquiry that would be really positive it would be for there to be another review as detailed and as forensic as the Pensions Commission”.

“I don’t believe that inertia is enough any more,” he continued. “I think that the overall picture shows serious disparities between the pensions expectations of many people, which have not received sufficient attention.

"If you want to get somewhere, you really have to understand where you are in the first place. I don’t think it is necessary for there to be a continuing commission, necessarily, but the work really does need redoing.”

Adding to this, Society of Pension Professionals defined contribution (DC) committee chair, Martin Willis suggested that a commission could be useful is in bringing together all the elements currently surrounding pensions, "bringing together all this good work that is being done".

"There are so many consultations at play, but are they all being lined up," he queried. "Are they all being interlinked and is there enough push towards innovation in some of these areas as well? I think that is the starting point of it."

However, Institute and Faculty of Actuaries' Pensions Board chair, Leah Evans, argued that "a lot of this work is already under way or being looked at", emphasising that if their is a new commission, it must be "ambitious".

"If there is a new commission it should very much consider the pensions issue through this lens of the great risk transfer and what support needs to be provided to individuals, but also it should look beyond pensions as a standalone issue and consider issues such as later life care costs, use of housing and non-pension savings, just to name a few," she argued.

"These are complex issues, so again, it is very important for any commission to take a long-term view and a cross-party approach."

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