Industry experts have called for a period of consolidation across the pensions landscape as Ros Altmann takes on the role of pensions minister under the new Conservative regime.
Altmann’s cabinet call-up took many by surprise last week, but her appointment as pensions minister has been welcomed across the industry.
She will take up the reins from former minister Steve Webb, whose five-year tenure brought dramatic change across UK pensions, culminating in April’s freedom reforms.
During Webb's term, the phased introduction of auto-enrolment and a brand new code of governance for defined contribution pensions, among other changes, challenged trustees, providers, employers and advisers to adapt and evolve their practices across administration, investment and governance.
Consumer champion Altmann was present throughout as a campaigner and advocate for good member outcomes, and undoubtedly will want to hit the ground running as she moves into the political arena.
Breathing space
Alan Higham, retirement director at Fidelity Worldwide Investment, said Altmann will provide a robust voice to challenge and push for change from within the government, but stated the industry needs "breathing space" to consolidate the recent whirlwind of changes.
“If you went out and asked pension managers across the country what they wanted from Ros, many of them would like a bit of peace and quiet for a while… a bit of breathing space and some time to implement,” said Higham.
Hugh Nolan, chief actuary at consultancy JLT Employee Benefits, said there was a need to go back and plug the gaps in understanding and add in much-needed detail to regulations.
“People have been given a lot of flexibility in how to handle their own pensions. The education, understanding and guidance around that is still evolving; there are still people getting to grips with what they should tell their members and what consumers should be aware of," said Nolan. He added that “embedding that change would be a number one priority.”
Morten Nilsson, chief executive at mastertrust Now Pensions, also thought there were a number of areas that need to be finalised and improved.
“The Pension Wise [guidance service] set-up isn’t fully there yet," said Nilsson. "There are still a lot of issues around people choosing retirement products."
He added: “With auto-enrolment we’re getting into a phase where there are loads of small companies [joining] in the coming quarters, which will be very different to what we’ve seen so far.”
Contribution levels
A period of calm would provide the industry with much-needed time to focus on the recent changes and to make sure they are implemented properly.
Nilsson, for instance, said auto-enrolment contribution levels should be a major priority for both the new government and DC schemes, and reflected on a point raised by Webb prior to the election.
He said: “There’s meant to be a big review of [auto-enrolment] in 2017. If you want to change the contribution levels and perhaps change the band earnings doctrine, that will take time to implement and you need to start that debate now."
Nilsson added: “There is some urgency to it – that is an important debate. People are contributing too little already."
Political consensus
Adrian Boulding, pensions strategy director at Legal & General and chair of the Pension Quality Mark, thinks one of the most difficult tasks facing Altmann will be to restore cross-party consensus to the pensions arena.
“There are various people who see the answer as a new pensions commission,” said Boulding.
“The key thing is not the method of doing it but actually getting there and achieving a strong consensus that all parties buy into," he said. "Then we get lasting changes for pensions and the stability we need."
