Future pension trends – what we learnt at the PLSA conference
Last week saw hundreds of pensions professionals head to Liverpool for the Pensions and Lifetime Savings Association’s (PLSA) annual conference.
Here’s four future trends REBA learnt about at the three-day conference.
1. Pensions Review interim report due in Autumn
In the opening keynote, pensions minister Emma Reynolds said her priority was unlocking the true potential of the £2 trillion pensions industry.
Reynolds said there had been 200 responses to the first phase of the Pensions Review and apologised for the short deadline put to stakeholders, citing the Treasury had “a lot to get through”.
She said initial findings would be published in an interim report this Autumn, with full measures released in 2025.
2. Retirement guidance for employees does not reflect the complexities of the UK workforce
Retirement adequacy was discussed at length in several sessions across the three-day conference.
Will Sandbrook, managing director of Nest Insight, said pensions guidance had worked well for online tools to help people better understand their pension, but it was unclear how adequacy measurements work for different types of earners.
He said: “Current adequacy measurements miss housing costs at retirement age and the cost of social care, for example. At the moment they’re very unclear on how to deal with a renter in retirement.
“Generalised standards can cause real problems because people are so different. For anyone earning less than a living wage, how much of their payslip should they be giving up [to pension savings]? It’s not straightforward.
“I’m sceptical that retirement adequacy can be solved by just engagement when there’s so many issues and disparities at play.”
3. Gen Z sceptical of pensions as a savings tool
Pessimism over retirement age, the cost of living, green investment and the cost of housing is causing younger workers to opt out of their pension, the conference heard on day two.
In the ‘Pensions: 18 to 30’ panel, Iona Bain, broadcaster and founder of Young Money Blog, said young people were interested in investing, but didn’t always consider a pension as a good tool for investment.
Private pensions were described by two panellists as a luxury few Gen Z employees could afford, and argued any increase to auto-enrolment contributions would turn younger people off pensions due to costs elsewhere.
Two of the panellists, who had roles outside of the pensions industry, said they get their money advice from a 50/50 split between official and unofficial sources.
They acknowledged a growing number of social media influencers offering investment advice online and encouraged more pension providers to use new tools such as TikTok to provide a more accurate financial education for younger workers.
This follows news that the Financial Conduct Authority has interviewed 20 social media influencers under caution to clamp down on “finfluencers” who may be touting financial services products illegally.
4. Pot for life no longer a priority for government
Julian Barker, head of policy collective defined contribution, costs and charges and decumulation at DWP, said the lifetime provider model (i.e. employees select their own pension provider for workplace contributions) was no longer on top of the government’s agenda.
The lifetime provider model was introduced last November by then chancellor of the exchequer Jeremy Hunt to simplify the pensions market.
The previous government had launched a call for evidence on plans to offer employees a choice on their workplace pension provider as part of the 2024 Autumn Statement, which also looked at whether a lifetime provider model would improve member outcomes.
Instead, Barker said the DWP was focussing its attention on the growing defined contribution (DC) market, which was now worth £10.6 million in master trusts. He predicted this would be worth £1.3 trillion of assets in 20 years’ time.
