This week in pensions: 30 January - 3 February

After a somewhat quieter start to 2023, the past week has seen industry work ramp up significantly, kicking off the week with a bumper package of defined contribution (DC) measures from the Department for Work and Pensions (DWP).

It proved a busy Monday morning, as industry experts dug into the detail of the government’s proposals, which included plans to extend the scope of collective DC (CDC) , a call for evidence on small pots solutions, as well as a consultation on proposals for a new value for money (VFM) framework, and confirmation on new illiquid investment requirements.

This was also published alongside new government research, which revealed that attitudes towards pensions were characterised by “detachment, fear, and complacency”.

Monday afternoon saw a continued focus on the reforms, as Pensions Minister, Laura Trott, provided further detail behind the measures at an event at the Pensions and Lifetime Savings Association (PLSA), highlighting "fairness, adequacy and predictability" as the three key pillars behind the reforms.

Industry experts have wasted no time in examining the new package, with many organisations emphasising that whilst the measures and intention are welcome, it will be important to get the detail of the proposals right.

More broadly, industry predictions for a busy start in the bulk annuity market have proven true, as the past week saw Morrisons Retirement Saver Plan agree a £762m buy-in with Rothesay, while the Veitchi Group pension scheme completed an £8m full buy-in with Just Group, and the trustee of the IMI 2014 Deferred Fund agreed a £175m partial buy-in with the Pension Insurance Corporation (PIC).

However, concerns have persisted in other areas, with the latest figures from HMRC, for instance, prompting concerns over pension tax complexity, as savers have now reclaimed a total of £970m in over taxation on pension withdrawals since pension freedoms were introduced in 2015.

The WPC has also raised concerns over delays to the publication of the state pension age review reports from the Government Actuary’s Department and Baroness Neville-Rolfe, arguing that the government is “keeping the evidence hidden”.

Dashboards anxieties have also persisted, with industry research revealing that just one-in-20 (5 per cent) pension scheme trustees and in-house pension managers expect their pension scheme to be able to provide pensions value data for all members at launch, while less than half (48 per cent) were confident that their scheme would be able to manage the increase in enquiries.

Work to address issues following the gilt market volatility in autumn 2022 also continued over the past week, as the Bank of England confirmed that it is midway through work to decide on the appropriate steady-state response to the gilt market volatility seen in autumn 2022, and is aiming to publish the framework in the second half of March.

And broader updates are also on the horizon, as this week saw the start of the High Court case over the government’s proposed method of paying for costs incurred by the McCloud judgment in relation to public sector pension schemes, as well as the start of the latest round of strike action at UK universities. .

Whilst the industry may have entered the week on a high, there is clearly a lot of work still ahead to improve member outcomes and protect savers, and a busy year awaits.

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