Pensions industry outlines top priorities for Labour's first 100 days

The pensions industry has been quick to react to the news of Labour’s general election win, urging the new government to provide further detail on the scope of its promised pensions review, and to push ahead with a number of ongoing pension reforms.

Yesterday’s (4 July) general election saw a landslide result for the Labour Party, securing more than 400 seats, whilst the Liberal Democrats also saw a record-breaking result, with 71 seats.

Industry experts have been quick to react to the news and, whilst awaiting confirmation of a new Pensions Minister, taken the chance to outline the key pension priorities that they would like covered in the first 100 days of the new government.

The Pensions and Lifetime Savings Association (PLSA), for instance, has identified five key areas for pensions reform for the next government to enact in its first 100 days to better secure the financial futures of millions of savers currently saving towards retirement.

In particular, the PLSA urged the incoming government to support adequate pension savings; help savers navigate choices at retirement; support well-run defined benefit (DB) schemes, bridge the pensions ad growth gap, and support the Local Government Pension Scheme (LGPS).

Labour’s promised pensions review is a key area that the industry is watching out for, with Eversheds Sutherland head of pensions, Jeremy Goodwin, highlighting the review as an “important opportunity to take stock of where we are and to develop a long-term vision for the UK pension system”.

This was echoed by People’s Partnership chief executive, Patrick Heath-Lay, who suggested that the change of government is an “opportunity to think creatively, with pace, about the future of pensions in the UK”.

“I hope that Labour’s pensions review will help revitalise the consensus that drove forward the success of automatic enrolment and create a roadmap for the future,” he continued.

“It’s crucial that government and the pensions sector can work constructively to enable greater pension fund investment in priority sectors, while ensuring the interests of pensions savers are at the heart of decisions."

However, Brightwell CEO, Morten Nilsson, argued that, for the proposed review to be meaningful, it needs to be comprehensive and look at the system as a whole – both pensions policy and taxation and investment.

“Labour has an opportunity to create an over-arching, long-term vision of what the pension system is trying to achieve and set a framework for reform that can underpin consistent policymaking and unlock greater value over the coming years,” he stated.

Broader calls for change are already emerging, as Aegon pensions director, Steven Cameron, urged the new government to set up an independent Pensions and Savings Commission within its first 100 days of office.

He stated: “With pensions being such an important long-term savings vehicle for millions, changes shouldn’t be rushed. And however ‘super’ the Labour majority, cross-party support can offer stability and certainty.

"We need a well-thought-through, logically-sequenced reform agenda, and the pensions industry stands ready to support this.

“Labour is likely to have its own list of ideas to explore, with rumours of reviewing the pensions tax system. There, completing the regulations to abolish the lifetime allowance is particularly pressing."

However, Cameron acknowledged that Labour is also coming to power with many of the previous government’s pension plans still under development, suggesting that "to allow progress, we need clarity on which will continue, change or be cancelled".

Heath-Lay agreed, noting that there are a number of ‘day one’ challenges for the new ministerial team.

"The pensions dashboard programme is making progress, but ministers must address key project documents which still require approval, and this must happen quickly if larger schemes are to connect to the dashboards’ infrastructure in April," he said.

Hargreaves Lansdown head of personal finance, Sarah Coles, also stressed the need for the government to bring work on the advice/guidance boundary to a conclusion, so people can get relevant support with their finances.

The long-awaited Defined Benefit (DB) Funding Code is another area that many in the pensions industry would like to see progress, after the general election threw the timing of the long-awaited DB Funding Code into question.

However, LCP partner, David Fairs, warned that, if the government wants to pursue a different approach, there could be a significant delay before the new code is laid.

This is not the only possible area where a potential change in the direction of travel for pensions policy could be seen, as Broadstone head of policy, David Brooks, said that whilst the legislative processes already underway are expected to continue, the "controversial" pot for life proposals could be the exception to this.

However, PensionBee director of public affairs, Becky O'Connor, argued that although not explicitly highlighted in Labour’s manifesto, the new government should address the 'pot for life' solution to tackle the pressing issue of lost pension pots in the UK.

"With over £50bn at risk of being forgotten in old pensions, immediate action is essential for better retirement outcomes for consumers," she said.

TILLIT CEO and founder, Felicia Hjertman, arguing that "if the Labour Government has the public’s interests at heart, they’d introduce ‘pot for life’ and let employees take back control of their security in retirement".

But Cameron suggests putting initiatives such as small pots consolidators and the pot for life model on the back burner for now, stating that "once the priority measures are in place, these may simply not be needed".

Instead, Cameron said that the new government’s first priority should be the planned enhancements to workplace pensions auto-enrolment, which have already received cross-party support and would boost pension pots for millions of employees.

This was echoed by Hargreaves Lansdown head of retirement analysis, Helen Morrissey, who noted that while the auto-enrolment extension bill got Royal Assent last year, as yet, we’ve seen no timetable for its implementation.

“These changes have the ability to really boost pension savings by enabling people to start saving at 18, with contributions coming from the first pound of earnings,” she continued.

“The timing of these changes is all important, as if they had been introduced during the cost-of-living crisis we could have seen people’s already stretched budgets placed under increasing pressure. However, as the pressure starts to ease, now could be a good time to put a timetable in place."

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