In this latest episode in the small pots/pot for life podcast, Corporate Adviser talks to those who broadly support the reforms. We note the view the social market foundation’s Michael Johnson widely credited with influencing the shift towards pot for life among politicians and policymakers. He says more competition will drive better value for members.
Talking to the podcast, Pension Bee’s director of public affairs Rebecca O’Connor says that the shift will ultimately hand more control and agency to pension scheme members and is, in many ways, a growing up of the system. It will be a long-term process, she says, but it will change how the industry acquires and retains members.
There may see a change from people “being members to being customers”. She says there is little evidence to show that pot for life will lead to poorer outcomes and points to the FCA consumer duty providing an important regulatory underpinning. There is also much less risk that pensions will be ‘lost’.
She acknowledges that work does need to be done in terms of reducing any employer admin burden. Pension Bee wants to be a pot-for-life provider, though she says it already plays the role for some customers among small businesses and the self employed.
The Lang Cat’s Tom McPhail is broadly in support of the reforms and suggests that in some cases, pension providers are worried about the impact on their businesses with consolidation likely. He also believes that the employers can still provide engagement and support even with staff in different schemes.
Chartered Financial Planner David Hearne, with Financial Planning Partners says the reform has focused the debate on who’s responsibility retirement savings is. He is glad that the conversation has started.
He sees increasing numbers of pots among his new clients and a lot of time is spent working out what they have got. If people come with one pension it will be a lot easier to do that work, he says.
His firm often works with business owners and senior executives so they want to be strategic about when they pay money into their pension. “We would rather they had a pot for life.”
He gives examples of where you can effectively create a pot for life already but that is for himself and his advised clients.