It is a critical time for DC – Pensions Expert took stock of the sector as it hosted its 10th annual Leadership of DC Pensions summit in the City last week.
It is of course a critical time for defined contribution. So it was it a good opportunity to take stock of how we got here and, as we pause at this juncture, to look at the ideas that both schemes and their members might have about what the later stages of the accumulation journey should look like.
Former pensions minister Steve Webb gave a keynote in which he said he expected any further change to be incremental, unlike the past 18 months.
He reiterated the case for pension dashboards and passports, and revived the arguments for pot-follows-member.
Webb also predicted – as many already have – that the charge cap would fall to 0.5 per cent, partly because Ros Altmann’s ‘brand’ of consumer champion would make it hard to resist calls for a cut.
But it’s the charges faced by consumers in a world of drawdown that many are concerned about, and on Tuesday there was a lively debate in the House of Lords on the matter.
Illustration: Ben Jennings
In a statement following this debate, Joanne Segars from the National Association of Pension Funds, said: “At the heart of this problem lies a tension between providing savers with products quickly and allowing time for a robust market to develop that’s fair to savers.”
Our panellists at last week’s event agreed with this sentiment. But one delegate said another stumbling block to drawdown is that its systems are not compatible with pension administration software.
During a session on DC scheme design, the NAPF’s Jackie Wells said that while pensions admin is broadly in need of greater investment, a lower cap might not make it worth providers’ while, making it difficult to see a way forward.
But to truly move drawdown beyond being off-limits for most people, and future scandals avoided, a way forward there will have to be.
As Labour peer Lord Hughes said during last week’s debate: “What the [prime minister] is really saying is that no planning was done whatever and no thought whatever was given to how this matter would develop. Is he aware that, the way things are going, this will make the PPI scandal look like a children’s tea party?”
Maxine Kelly is editor at Pensions Expert. You can follow her on Twitter @MaxineEK and the team @pensions_expert.
