The Pensions and Lifetime Savings Association (PLSA) has called for the next government to target increased contributions into workplace pension to improve retirement outcomes.
It says it wants to see all parties address the issue of better pensions in their manifestos for the upcoming election.
The PLSA points out that workplace pensions invest £2 trillion into the UK economy and provide vital income for millions of people. It says as well as targeting increase contributions, it wants policies to ensure more effective saver engagement with pensions, improved scheme governance and more options for schemes looking to consolidate.
It says more people are now saving into workplace pensions, thanks to auto-enrolment, and these savers also have more freedom over how to use their savings than ever before. But the PLSA points out that “the future remains uncertain” as people don’t know how much to save and many defined benefit schemes and their employers face funding challenges.
PLSA director of policy and research Nigel Peaple says: “The Pension Schemes Bill must be reintroduced as soon as practicably possible.
“With the retirements of millions of people hanging in the balance, the next Government cannot allow pensions to become a back-burner issue.
“Ensuring adequate contributions, fostering effective engagement and allowing well-run schemes to operate at appropriate scale provides the blueprint for making the greatest difference to the greatest number of savers.
“Together with the pensions industry, the Government must seize this enormous opportunity to help more people achieve a better income in retirement.”
To address these challenges the PLSA is proposing four ways to promote better retirement outcomes:
- Boost savings levels: to achieve this the PLSA wants the next government to build on the success of automatic enrolment and increase contributions to 12 per cent of salary by 2030, split 50-50 between employer and employee.The PLSA also wants the Lower Earnings Limit for automatic enrolment to be removed as soon as possible. This is the current government’s stated policy. It adds that any solution to tackle social care funding should not be at the expense of existing and extra pension savings.
- Effective engagement: to achieve this the PLSA wants to ensure the next government supports and drives forward the Pensions Dashboard initiative. It says it wants to ensure the first dashboard is non-commercial, has access to data, and protects consumer information. IT should also include information on State Pension benefits.
- Boost pension regulation: the PLSA says that while most pension schemes are well-run and managed, high-profile cases like Carillion and BHS damage confidence in the pensions system. The Government’s 2018 Defined Benefit White Paper proposed changes that will help make DB pensions more sustainable. The next Government should legislate quickly to give the Pensions Regulator new powers to take action sooner, impose appropriate fines, and have more oversight of risk corporate transactions in order to prevent reckless behaviour and protect savers’ hard-earned money.
- Pensions and scale: The PLSA is calling the next government to take forward proposals from the 2018 White Paper to strengthen protection for savers by allowing consolidation and the creation of ‘Superfunds’, to protect member benefits in DB schemes where deficits remain.