The Association of Consulting Actuaries (ACA) chair, Steven Taylor, has called on the new Pensions Minister, Laura Trott, to favour increased flexibility in the public policy approach to boosting pensions amid the current economic circumstances.

In a letter to the new minister, Taylor explained that while adequate pension saving will require incremental increases in defined contribution (DC) pension contributions, "this is currently an extremely challenging time for public policies to make new requirements".

In light of this, although Taylor suggested that the minister should look to extend auto-enrolment provision over the next few years, he acknowledged that it may not be desirable to rapidly raise minimum auto-enrolment contributions in the current environment.

Taylor therefore suggested that Trott should also consider more steps to allow long-term savings to be used more flexibly when and where they are needed.

"We strongly support the early extension of collective DC (CDC) schemes to a wide audience as one means to boost pension savings," he added.

“Additionally, ministerial statements need to spell out time and again the kind of levels of regular voluntary contributions that savers and employers need to aspire to in order to deliver adequate and improving retirement incomes in the years ahead. This would become even more important if full inflation linkage to state provision is challenged”.

Taylor’s letter also highlighted the need to address the potential for unintended consequences, which he described as “significant”, requiring continued, appropriate flexibility in how long-term commitments are sought and delivered.

“Importantly, the policy response to recent liability driven investment (LDI) experiences must be proportionate," he continued.

"Great care is needed in making changes – new regulations, codes and guidance need to reflect this, and we are separately making representations to Department for Work and Pensions (DWP) on these matters over the coming weeks."

Taylor also discussed dashboards in the letter, stating that the ACA were “worried” that the complexities in delivering dashboards that will provide reliable figures upon which savers can make important decisions are currently being under-estimated.

“We believe now could be a good opportunity for the new minister to pause and reflect on whether there should be further easements to the timetable that might better ensure strong outcomes are delivered immediately from day one following their launch,” he said.

The letter, which was copied to the Treasury, also underscored that any changes to the pension tax regime that may be under consideration should not be yet another “tweak”, but that changes should be thoughtfully considered and properly consulted upon.

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