5 things we learned at REBA’s Future of Pensions Summit 2024
Held yesterday (19 September 2024) in London, the invitation-only event saw over 150 delegates come together to build a future-looking pensions and retirement strategy that is compliant and fit for purpose.
Here’s five things we learnt from the day.
Noise in the pensions market is cranking up
Momentum in the pensions industry has been increasing over the past few months, and there is now a real appetite to make changes for the better.
Chris Clark, policy manager at The Pensions Regulator (TPR), said: “There is real enthusiasm and optimism for pensions, with government and industry tackling and addressing issues that will have a real impact on people’s retirement outcomes”.
Delegates were urged by several speakers throughout the day to take part in the government’s call for evidence as part of the Pensions Investment Review.
It aims to explore new ways to boost investment, increase saver returns and tackle waste in the pensions system.
The call for evidence closes at 11:59pm on 25 September 2024.
Yet, as Yvonne Braun OBE, director of policy, long term savings and protection at the ABI, cautioned: “Policy interventions have to be for the benefit of savers.”
Panellists urged that any interventions need to be supported by a political consensus across different government parties, ensuring there is stability and engagement on products.
Value was the most used word of the day
Auto-enrolment is widely recognised as an overwhelming success - enabling millions of people to save into a pension, many for the first time.
Defined contribution (DC) pensions are now fundamental to employees’ retirement savings and as employees age, attention is turning to the value these arrangements are delivering.
Clark said: “Auto-enrolment has been a great success, but is that system working as best as it can do?
“Are savers getting value for money?”
This is where the Financial Conduct Authority’s consultation for a new value for money (VFM) framework for savers invested in default arrangements of workplace DC pension schemes comes into play.
It aims to reduce the number of savers with workplace personal pensions that are delivering poor value, and drive better value for money across the workplace DC market through greater scrutiny and competition on long-term value rather than predominantly cost.
As Braun from the ABI, noted: “There needs to be less focus on cost and more on long-term value of pension contributions.”
The consultation closes on 17 October, again employers are encouraged to take part.
Decumulation is the next big challenge
A key area of focus at this year’s Future of Pensions Summit surrounded what employees do at retirement stage.
There is growing acknowledgment that employees need better support when making this key decision.
A wrong step at this point could see an employees’ retirement income severely diminished, undoing all of the good work and saving that has been done to ensure an employee reaches retirement with an adequate savings pot.
The pensions industry is working hard on products for the workplace market to support decumulation.
Yet speakers throughout the day urged employers to play a larger role in decumulation decisions and talk employees through the retirement journey.
The wait for the pensions dashboard could soon be over
Pensions dashboards - the long tabled tool that will enable employees to view all of the pensions in one place - are coming.
It has been a long wait, but as Braun from the ABI, noted “Dashboards will be transformational”.
This is largely due to efforts to increase engagement with pensions, with the hope employees will be more aware of their savings by being able to track and consolidate pensions.
REBA has been busy making noise too
REBA has produced its first Future of Pensions Research, which unveils an appetite for change from employers.
It provides key insights into the future of pensions at a time of significant potential shifts in the industry and in legislation.
And finally, the big rumour swirling around is that Treasury is looking at applying employer National Insurance contributions (NICs) to employer pensions contributions - potentially a big fiscal win.
So REBA and the ABI have partnered to put together a short sharp survey to gauge how employers might react if this change were to come in.
The survey is anonymous on an individual response level, but it is crucial we gather robust data on what could happen if this were to come into play so we can present this evidence to Treasury.
We’d like an honest idea of how leading employers might react to paying NICs on employer pensions contributions.
