Government pensions review – Calum Cooper comments

Commenting on the Government’s announcement of a pensions review, Calum Cooper, Head of Pensions Policy Innovation, Hymans Robertson, says:

“The silence on pensions review in the King’s speech was a worry. So, we’re relieved and excited to see Labour re-affirm the pension review, and at pace. The focus on investments is a sound place to start: the emphasis being doing more with what we have and where political capital can be built, not spent. This is about pace, momentum and confidence in areas that do not cost money. In practice, to support this the pensions industry needs a practical road map and attractive opportunities. As part of the review, once the Government has identified where investment is most needed, it must ensure this roadmap is clear and make it attractive to pensions. The pensions and financial services industries will then be able to support it and align this approach with their long-term goals.

“We look forward to the intended second phase of the review and take comfort from the intent to ‘improve pension outcomes including assessing retirement adequacy’. There’s a big intergenerational gap between those with adequate DB pensions and younger generations on course for inadequate DC pensions incomes. Whilst AE has been a huge success in getting the employed saving for later life, the level and breadth of saving is not enough and there is so much more to be done. Our analysis has shown that only 1 in 3 DC pensions scheme members are expected to reach the PLSA’s ‘moderate’ retirement living standard let alone the ‘comfortable’ standard. There’s also a gender pension gap to be closed; how do we improve the fact that men expect more than 25% higher pensions than women? We hope this second stage of the review considers all these aspects and encourages the industry to think innovatively to find the solutions.

“We still believe that an independent pension review and cross-party consensus would be the best way to solve these knottier problems and help ensure the tough choices are made that last a generation.”