The industry’s wishlist for the autumn statement

The fact that pensions didn’t feature in the King’s Speech, one industry insider muttered, “shows where pensions sits on the government’s priority list”.

The lack of any pensions mentions certainly surprised many, given how much change is happening in the pensions industry at present. From the recent Mansion House summit to the announcement that the UK’s first commercial superfund has been announced, via an energetic speech from the Pensions Regulator at the recent PLSA annual conference, much is changing at pace.

However, the omission of pensions from the King’s Speech doesn’t mean it is off the government’s agenda.

As Nigel Peaple, the PLSA’s director of policy & advocacy said: “Although it is disappointing that the government did not include a Pensions Bill in today’s announcements, its absence will mean more time can be allocated to ensuring any reforms are well designed after in-depth consultation with the pensions sector.

“We still believe it very likely that the government soon will take more action on pensions, this time in the context of UK growth, at the forthcoming autumn statement.”

So, what’s on the industry’s wishlist?

Mansion House reforms

Following the recent Mansion House summit, many in the industry were expecting the King’s Speech to trail more detail on the government’s productive finance agenda.

Mark Tinsley, senior actuarial consultant, defined benefits at consultancy Barnett Waddingham said: “As an industry, to move forward we are looking for concrete details to back-up the government’s high-level aspirational aim of diverting more of the UK’s £2.5 trillion pension sector assets into higher risk, UK based assets. In particular, it is essential that appropriate safeguards are well considered to protect savers from the risks of the proposals.”

Dave Brooks, head of policy at consultancy Broadstone, also predicts that productive finance will make it into the autumn statement. “If you get those things lined up right, the autumn statement could say, ‘We have great new products for schemes to invest in,’ then the DB Funding Code could come out and says, ‘Schemes looking to run on, here is this lovely product for you to allocate to.’ That could be the story.”

A bit of stability

Does the pensions industry really need a Pensions Bill to get moving on well-acknowledged problems? Brooks thinks that the industry already has the tools it needs to move forward in areas like drawdown product development and consolidation. “It feels like there is enough momentum already.”

A bit of stability in pensions regulation, while the industry tackles its already long to do list, could be a blessing in disguise.

A value for money framework

That said, a new value for money framework for DC schemes would help focus the mind, argued Steven Cameron, pensions director at Aegon.

Cameron said: “The initiatives include a new value for money framework for defined contribution pensions which will shift the focus away from minimising costs to maximising value for members, including through seeking out new investment opportunities. Those schemes which can’t meet the new test will be expected to wind up and consolidate into a larger scheme, which is then more likely to invest in private assets.”

CDC

Could CDC make it into the Autumn Statement? Steven Cameron hopes so. “There are also plans for extending a new form of Collective Defined Contribution pension which is likely to have longer investment time horizons, making private asset investments more likely.”

Brooks was disappointed CDC didn’t make it into the King’s Speech but, given the complexities involved, wouldn’t be surprised if the government decides to wait until a new parliament is in place before pursuing it. “If big proposals like CDC and small pots aren’t going to come to fruition immediately, it’s not worth pursuing them now. However, is a real shame they are going to be delayed when they were already a few years away from reality.”