There was criticism from the pension industry that Chancellor chose to include ‘pot for life’ pension proposals in this year’s Budget speech.
There have been concerns expressed about this ‘Lifetime provider’ model, which would give employees the right to chose their own workplace pension and keep this when moving jobs, since it was proposed by Jeremy Hunt last year.
The Pensions Management Industry director of policy and external affairs Tim Middleton says: “We feel frustrated that the Chancellor has chosen to press ahead with the Lifetime Provider initiative.
“We noted earlier this year that this was the wrong time for an initiative such as this and are concerned at the disruption this could cause for so much of the good work achieved to date by automatic enrolment.”
However some providers said the Chancellor statement that this would be explored further acknowledged the difficulties in implementing such a scheme. Phil Brown, director of policy at People’s Partnership said: “There’s now consensus between the pensions industry and government that more work is needed to understand how the lifetime provider proposal might work in the UK.
“The Treasury appears to recognise that the administrative and regulatory work required to allow people to choose their workplace pension provider is enormous and cannot be rushed. It is right that this idea is explored further but it is years away from delivery.”
Others industry figures said these measures had the potential to increase engagement, but wanted better infrastructure would be needed for this to be effective. Gallagher’s UK benefits and HR consulting division CEO David Piltz says: “Discussions surrounding the ‘pot for life’ plan in the spring budget suggest a positive outlook for those who eagerly await relevant legislation. If implemented correctly, it is true that the proposals have the potential to enhance pensions engagement.
“The proposals could allow individuals to have more visibility and control over their wealth. By transforming accumulations of ‘small pots’ into one large pot using the lifetime provider model, the initiative could bring simplicity to pension schemes, evoking an increased sense of ownership for individuals.
“However, we need more clarity on how this will work in practice, given that the proposal requires intensive planning and poses high risks if not implemented well. Careful consideration needs to be taken when building the required infrastructure for the initiative, and the government must not underestimate the magnitude of this job, nor the importance.”
