PLSA director of policy and advocacy Nigel Peaple
In the Pensions and Lifetime Savings Association's (PLSA's) regular column for Professional Pensions, the trade body’s director of policy and advocacy takes a closer look at some of the policy initiatives that kept the Pensions and Lifetime Savings Association (PLSA) busy over the last year.
Pensions and Growth
Arguably the most discussed policy issue in 2023 was the government's interest in exploring how pension scheme assets might be ‘unleashed' to drive additional growth in the UK economy. Following consultation with pension providers, policymakers, and think tanks, in October the PLSA published an updated policy position paper, expanding on its earlier report, Pensions & Growth: Supporting Pension Investment in UK Growth, which included a series of policy, regulatory and fiscal recommendations aimed at supporting UK economic growth, without putting undue risk on members' savings.
Building on its earlier paper, the PLSA outlined specific recommendations across six key areas: the pipeline of assets, DB regulation, taxation, consolidation, the market for DC under automatic enrolment and raising pension contributions.
Pension Adequacy
Another key highlight of our policy work in 2023 was our final Five Steps to Better Pensions report. Shaped by consultation with key stakeholders, new adequacy research and further thinking by our members, the suggested reforms will help everyone have an adequate, fair and affordable retirement.
These reforms include set five key steps: setting clear goals for the UK pension regime, ensuring the state pension safeguards against poverty, incrementally raising workplace contributions from 8% to 12%, providing support for under-pensioned groups, and action by the industry to encourage more or more effective pension saving by initiatives like the Retirement Living Standards and Pay Your Pensions Some Attention campaign. We also supported our work on adequacy by undertaking, with the PPI, new work to understand more about those on low incomes in our report, Uncovering the Profile of Low Earners in the UK.
Alongside our own advocacy work, The PLSA and 11 other organisations were founding signatories of a new charter demonstrating a consensus for reforms aimed at creating an adequate, fair and affordable pension savings system for all.
The Building a Consensus for Better Pensions charter calls for major reforms to improve pension outcomes for all retirees.
Many politicians, among them former minister for pensions Laura Trott, also accept the need for increased contributions within the pension sector, indicating a strengthening consensus for policy reform.
The unified thought on pensions adequacy reforms is a testament to the dedication of an industry coming together to help everyone achieve a better pension in retirement.
DB funding code
This year we saw the second major consultation of The Pensions Regulator's (TPR) draft DB funding code, which positively included additional flexibility, particularly around the investment strategies which schemes can adopt and concepts of reasonable affordability. Although our submission welcomed the additional flexibility, it is important that the new regime fully recognises that not all DB schemes are the same. We believe TPR can go further in providing flexibilities and we hope very much to see this emerge in the final version of the code.
DC decumulation
In 2023, the PLSA was very pleased to see the government back proposals that, if enacted, would mandate DC schemes to provide enhanced support to savers at retirement. These proposals align closely with the PLSA's Guided Retirement Income Choices framework, emphasising diverse default retirement products for flexible and sustainable income.
Crucially, the new framework will require stringent standards and effective governance if it is going to achieve positive outcomes, especially for less engaged members. Decumulation support extends beyond product implementation; effective communications and guidance are equally pivotal.
Local Government Pension Schemes (LGPS)
The LGPS was on the receiving end of a significant consultation from the Department for Levelling Up, Housing and Committees (DLUHC) on investments/pooling in LGPS Funds in England and Wales. As we stated in our consultation response, the LGPS faces mounting regulatory challenges, so it is important that any new requirements are carefully thought through and that any consolidation is done in a way that ensures effective governance by LGPS pension funds and allows sufficient time to ensure the operation takes place in the interests of scheme members.
During this year we also produced two best practice guides to support LGPS employers: Employer Guide to the LGPS and the Regulatory Map. We hope that each will prove helpful to those who manage the UK's largest funded pension scheme.
In addition to our consultation responses and research the PLSA also updated its Retirement Living Standards and took the pension megaphone, Pay Your Pension Some Attention, on a nostalgic journey back to the 80's and 90's.
The short summary above only represents a small part of the PLSA's policy work in 2023. As we head into 2024, a General Election year, the PLSA expects to be just as busy in our mission of helping everyone achieve a better income in retirement.
Nigel Peaple is director of policy & advocacy at the Pensions and Lifetime Savings Association
