Interview - Sophia Singleton takes over as SPP president

The SPP has elected Sophia Singleton as its president, taking over from Steve Hitchiner.

Singleton – a partner and head of defined contribution (DC) consulting at XPS Pensions Group – officially took over the role on Saturday (1 June) from Hitchiner, the Barnett Waddingham partner who has held the role for the last two years.

Speaking to Professional Pensions, Hitchiner said highlights from his term in office had been the increasing engagement the organisation has had with policymakers as well as its growing events programme and membership.

Indeed, over the last two years, the SPP says its membership has grown by around 20% and notes it has "driven a regular drumbeat of activity" including events, consultation submissions and meetings with a range of industry stakeholders.

Singleton said she will look to build on these successes – aiming to increase the SPP's profile and influence further during her tenure.

She said: "Looking ahead, I will work closely with industry stakeholders and policymakers to stimulate constructive policy analysis and debate to achieve the best possible outcomes for our members.

"In particular, I'd like to focus on ways consumer support and protections can be strengthened to improve DC outcomes, focusing on reviews of auto-enrolment, development of long-term retirement solutions and exploring how to improve investment outcomes, all while ensuring security for defined benefit (DB) members remains a priority."

Singleton said she will also look to help the pensions industry to be more diverse and inclusive – driving forward the work the SPP has already been doing on equality, diversity and inclusion (EDI) and aiming to establish the organisation as a champion of EDI within the industry.

She explained: "When I look at the SPP, it is built on that cross-industry collaboration which allows us to bring really diverse viewpoints to any to any debate, and it's really important for me that everyone who's involved in that feels respected and has a voice."

Singleton added: "The SPP has the power to amplify all the good work that's been done by all of our members across the industry in this area."

Challenges

Looking at what he feels are some of the biggest challenges in pensions at the moment, Hitchiner focussed on the potential issues around dealing with running down and running on DB schemes – an area which is seeing significant innovation at the current time, but also presenting some challenges.

First of all, he stated the importance of remembering that member security must be the first priority when thinking about new ideas and innovations in DB.

But he also pointed to the complex nature of DB runoff and DB endgame – warning of potential unintended consequences going forward.

He explained: "Dealing with DB liabilities isn't straightforward and the policy options that are currently being considered around things like access to surplus and public consolidators are very complex and they do have the potential for significant unintended consequences.

"It's important for all of the issues to be considered very carefully and properly understood."

Singleton felt there are a number of challenges on the DC side of things – an area where she says a "huge amount of work" will need to be done over the next few years.

She said one of the key areas that needs work is on strengthening consumer support and protection – but notes the Financial Conduct Authority's (FCA) advice guidance boundary review is an "important and very welcome" step in the right direction here.

Singleton explained: "The FCA has been so focused on advice and advice being done properly, but there is a huge part of society that has been left out and has been relying on other sources like social media and so-on. I think the review they're doing is absolutely a step in the right direction and the work we'll be doing at the SPP is to ensure that any new rules will be properly understood and hopefully uniformly applied."

Singleton also said there is a lot of work to be done around improving DC outcomes.

She said: "Whenever we talk about DC outcomes, what's paid in is the crucial element… We need a fundamental review of auto-enrolment (AE) contributions and we'd like to have a timetable set out for increasing the minimum contribution rates and for extending AE to casual workers."

Singleton said there are also challenges and opportunities around helping DC members get better risk return outcomes, where she says the industry needs to continue its work to overcome some of the barriers to investing in illiquids, and in delivering better long-term retirement products, an area she says where there is lots of innovation to be done.

Priorities for a new government

When it comes to the single pensions policy a new government could implement, Singleton believes adequacy is key.

She said: "I'd be 100% on AE contributions but I recognise it's not an easy one to fix. The reality is Retirement Living Standards costs have just increased by significant amount and the estimates are that people probably need to be contributing 15% into their pensions.

"We need to have a plan – I'm not saying it has to be a very quick plan, but we need to have a plan to get there over the longer term. It has taken Australia 30 years to get up to the 12% rate and but at least they've got there now. But that is what I would ask… For us to have a plan that everyone can hopefully sign up to."

Hitchiner said he agrees adequacy would be the number one priority but also believes reform of the existing Pension Protection Fund (PPF) levy system is also an urgent priority.

He explained: "The framework for the existing PPF levy is no longer fit for purpose. It's leading to the PPF collecting levies that they don't actually need – that needs looking at fairly urgently."

Hitchiner added: "The PPF are continuing to collect hundreds of millions in levies because of the way that the levy system is designed – if they put it down to zero, then they would be unable to then increase levies again in the future.

"The original framework was designed so as to protect levy payers. But it didn't really envisage this scenario, whereby the PPF has a significant surplus, and it arguably doesn't need to be collecting any levies at all right now. But they are stopped from putting the levy down to zero because of the structure they have."