There was widespread industry support for the Labour’s manifesto pledge to conduct a wide-ranging pension review, although many voiced concerns about the lack of detail on major pension issues.
When it comes this proposed review, industry experts said details were scarce on the extent and timing of this review, and whether it would be independently run.
The Lang Cat director of public affairs Tom McPhail says: “Where Labour talk about a review of the pensions landscape, it’s not yet clear how broad or independent this will be.” He said the pensions industry would welcome an independent commission along the lines of the Turner review, which paved the way for auto-enrolment, “to address the long-term challenges involved in providing a sustainable retirement income for all savers.”
The Pensions Management Institute also welcomed the review. Its director of policy and external affairs Tim Middleton says: “We are encouraged that the Labour Party has committed to better retirement outcomes for pension savers and that its review will seek to identify the best way to achieve this. Whilst it is unclear at this point what specific outcomes the review is going to achieve; it is important that a thorough review takes place.”
Pension consultants also voiced their support. Hymans Robertson head of pension policy innovation, Calum Cooper says: “We’re really pleased to see that the Labour Party’s manifesto is proposing a pensions review. This is desperately needed to ensure the pensions framework can provide sustainable retirement incomes for savers and help secure later life income for millions of people.
“For it to be truly effective, however, we believe this should be led by an independent pensions commission. This is about delivering later life security for today’s workers and generations to come and not a game of party politics.”
Many industry experts were pleased to see a focus on continued consolidation particularly in the workplace pensions sector, and support for the triple lock. Both suggest that a Labour government would continue the broad pension policy set out by the Conservatives. However it was noted that there remained several areas of wider pension policy that both the Labour and Conservative parties were quiet on.
Dalriada Trustees director Adrian Kennett says: “My worry on Labour and Conservative manifestos is more about what they are not saying. Labour is supportive of the direction of travel from the Conservative Mansion House speech — seeking to drive UK pension funds to invest in UK assets — something not mentioned in the Conservative Manifesto.
“Labour will ‘adopt reforms to workplace pensions to deliver better outcomes for UK savers’. The best way of delivering a better outcome would actually be for more workers to contribute more. There is silence on the reforms to Auto-Enrolment. Silence on the PPF as a consolidator. Silence from Labour on the taxation of pensions, for example the Lifetime Allowance. At some point, the books have to be balanced and people have to pay. There are inescapable problems that aren’t being talked about – largely the fact that 8 per cent of earnings through auto-enrolment doesn’t buy you a comfortable retirement.”
Many wanted to see a firm commitment and timetable for raising AE contributions, but neither party has set out detailed plans on when they will do this, despite an acknowledgement that current savings levels are likely to be insufficient.
Cooper says: “The biggest pension challenge any new government will have is the rapidly emerging pensions division between those generations. Often between those with a DB and DC pensions.
“DB Pension are likely to provide an adequate pension income while those with a typical DC pension face a massive inadequacy challenge. This difference between the older and younger generations is quite simply inter-generationally unsustainable and must be addressed.
“Issues such as deciding how to use DB surplus, encouraging innovative new pension design for DC – whether that’s CDC or other risk sharing ideas, looking at solving the decumulation puzzle, gradually stepping up Auto Enrolment contributions and developing new thinking to help savers navigate from work into retirement safely and successfully need to be addressed.”