Joanne Segars: What the Pensions Bill should look like

Given the sheer scale and pace of pension reform in the last few years you might think the pensions sector would shy away from further legislation, but not so. The Pensions and Lifetime Savings Association (PLSA) welcomed the Pensions Bill 2016-2017 announced in the Queen’s Speech in May and all the recent change is exactly why it is needed.

The bill is an ideal opportunity for the government to improve on the recent reforms of automatic enrolment and pension freedoms. Equally important is the opportunity for the government to set the course for a long-term savings policy in the UK by establishing an Independent Retirement Savings Commission.

Automatic enrolment has brought over six million people into workplace pensions who were not six years ago and pension freedoms have given people many more opportunities about how they use their retirement savings.

We know savers welcome both these changes but each needs further attention for a culture of saving to flourish in the UK.

Protecting savers

Master Trusts are essential for delivering automatic enrolment, and are giving millions of savers a great deal, but there is a danger a small number of poorly-run Master Trusts could be putting savers at risk.

We’d like to see the Bill give the regulator enough power to make sure all Master Trusts have strong financial backing and competent trustees – and to make clear a process that shows how members would be moved without financial loss if a Master Trust fails.

Retirement Quality Mark

Most people approaching retiring under the pension freedoms don’t intend to seek advice or guidance and lack the confidence to shop around. In fact, the majority of savers told us they will look to their pension provider for support in making decisions.

We’d like the bill to give trustees and providers powers to help savers spot good value products by signposting scheme members to products with a Retirement Quality Mark. This would leave savers free to make their own choices but it would safeguard the interests of those who are unwilling or unable to make a choice.

The critical factor in the success of both automatic enrolment and pension freedoms will be for savers to believe they can save for their retirements today, confident the goal posts won’t be moved radically tomorrow.

A pensions commission

While savers welcome pension freedoms the big change also challenged their confidence and belief in saving for the long-term.

More than half (56%) of savers told us that following pension freedoms they felt more uncertain about what the future holds for their retirement and 53% said they thought the changes were introduced to chase votes. A pensions commission will help restore this confidence and ensure savers’ long-term interests are at the heart of pensions policy.

We’ve been advocates for such a commission for a long time and we’re not alone. Our report ‘The case for an Independent Retirement Savings Commission’ outlined the case for a standing commission to advise future governments on pensions and savings policy – providing long-term stability for the industry and savers alike.

This is not about creating another body for pension insiders to talk to one another. It is about building savers’ confidence in pensions and turning around today’s low confidence in pensions. It’s time to return first principles and agree what a good retirement savings system looks like in the long-term and develop policies that take us toward that goal – without distraction.

Joanne Segars is chief executive of the Pensions and Lifetime Savings Association