Pensions are by definition a long-term product, but the UK Defined Contribution (DC) pensions market is stuck in a cycle of short-term thinking. The answer to this disconnect is an independent long-term savings commission.
Changing governments, pensions ministers and policymaking priorities have led to a breakdown between the government and pensions industry. The industry is frustrated that the ever-increasing need for individuals to take responsibility for their own retirement income, and the reliance on DC pensions for that, is confounded by short-term tactics when what is needed is longer-term strategy.
We spoke to 24 recognised pension policy and/or technical experts across Master Trusts, EBCs, trade bodies, providers, fintechs and more to form a consensus view of where we’re headed (or not) and the likely pain points.
The outcome was an informed view of the likely outlook for DC pensions: consolidation, Collective Defined Contribution Schemes, pension dashboards and tacking the small pots issue, to name just some topics.
While the current pensions system has its good points it also faces challenges. Many of these could be addressed by a long-term savings commission, separating long-term pension strategy from the necessarily cyclical government approach.
Removing politics from pensions would enable continuity and consensus. The UK government missed the opportunity before by not forming an ongoing advisory body from the highly successful Turner Commission. Now is the time to rectify that.
The paper is free to download, thanks to the support of People’s Partnership.
We hope you enjoy the paper and look forward to hearing what you think.