UK - Alan Pickering's long-awaited Simplification Review will fail to stem the tide of defined benefit scheme closures because "it is not radical enough".
That is the verdict of some of the industry’s top consultants who were speaking ahead of today’s publication of the review.
The government’s bid to hail the review as the “saviour” of occupational pensions is a false promise, says Towers Perrin principal Mark Duke.
He added: “If Pickering clears out 10 years of legislation, all we’ll have is the same situation we had 10 years ago. The danger is that we could end up back in the same situation that we are in now.”
Consultants claim that Pickering’s hands were tied from the outset by the government’s refusal to consider radical reforms, such as the restoration of compulsory scheme membership, removing the earnings cap and abolishing contracting-out.
Deloitte & Touche head of investment services Tony Osborn-Barker said: “This was never going to work from day one. Pickering was hamstrung by the government and had a near-impossible task.”
Society of Pension Consultants president Donald Duval said: “This is going to be another large piece of legislation. The removal of some of the excessive interference in benefits design, and indexation will be helpful, but they are not radical enough.”
But Norton Rose head of pensions and member of the simplification review team Peter Ford said: “It is not a panacea for all of the issues facing pensions at present, but goes a long way to producing a pragmatic and effective simplification of pension regulation.”
Key recommendations in the review include:
- A new pensions Act.- Reform or replacement of OPRA – creating a body that does not focus on the minutae of non-compliance.- Schemes to choose the indexation of benefits and survivor pensions.- Scrap vesting period.- No member-nominated trustee opt out, but no prescription on how they are selected or appointed.
Aviva has created a new pension skill for Amazon Alexa that allows customers to find out how much they have saved towards their retirement.
PP has compiled a list of what to watch out for over the coming months.
The proposed cold-calling ban may be ineffective if a collaborative regulatory approach between the UK and the European Union (EU) is not maintained post-Brexit, the Pensions Management Institute (PMI) has warned.
Some 56% of defined contribution (DC) asset managers do not believe they will have transaction cost information in time for pension funds' March year-end statements, according to Lane Clark & Peacock (LCP) research.