With Andy Burnham set to formally replace Keir Starmer as the UK’s prime minister on Monday 20 July, some within the pensions sector are questioning what this means for the industry.
Currently, Burnham has pledged to retain the politically contentious triple lock on the state pension. He has also promised that he would not give direct cash compensation for the Waspi women who claim to have been unfairly victimised by changes to pensions that equalised payouts on the basis of gender.
The nation has also seen the recent passing of the Pension Schemes Act, which contains key pieces of legislation such as the consolidation of local government pension schemes, and a value for money framework that will be introduced for large defined contribution pension schemes.
Burnham and the incoming government are also expected to work within this legislation and also the recommendations of the ongoing Pensions Commission, the first of its kind since 2002. The commission’s interim report was published in May this year, with the final report expected to be published in 2027.
Solving the pensions adequacy gap was a key concern of the interim report and the final report will likely build on this position, possibly through recommending increased employer and employee pension contributions.
Chris Eastwood, chief executive of workplace pensions provider Penfold, says: “Andy Burnham takes office at an important point for workplace pensions, with a significant programme of reform already moving into delivery. The priority should be maintaining momentum and giving employers and providers the clarity they need, while ensuring that changes lead to better value, simpler experiences and stronger outcomes for savers.
“Auto-enrolment has brought millions of people into pension saving, but participation alone does not guarantee a comfortable retirement. We would welcome a renewed focus on helping people understand whether they are on track, encouraging stronger engagement and supporting groups that remain underserved, including the self-employed.”
The fate of current pensions minster Torsten Bell remains unknown. Bell, who was revealed in the Mandelson files to have referred to his role as ‘safe politically’, may have eyes on further Cabinet positions, and is even considered to have an outside chance to be the next Chancellor of the Exchequer.
According to consultancy Lane Clark & Peacock, a key priority for Burnham’s government should be surplus use for pension schemes. The Department for Work and Pensions has now issued draft regulations on surplus use alongside a statement from The Pensions Regulator.
Jonathan Griffith, LCP partner and head of endgame innovation, says: “The publication of draft regulations on surplus extraction is a major milestone in turning the government’s ambitions into a practical reality, and the confirmation that the new regime is expected to be in force from April 2027 was very welcome.
“For the first time, schemes, sponsors and trustees have a much clearer picture of how surplus sharing could work, albeit we expect actual surplus sharing deals to be more varied beyond what is covered in TPR’s statement.”
