UK - Tax simplification will come at a cost to schemes and administrators, Gissings Advisory Services warns.
The firm pointed out the Treasury’s move to cut legislation and regulation through the much-vaunted tax simplification paper would have a short-term cost on the industry.
Managing director Paul Clark said: “The good news is that we have lost a lot of legislation and regulation, but there is a cost in that we have to invest in the short-term to simplify ongoing administration.”
The £1.4m savings cap will have a long-term administration saving for larger DB schemes, which previously had to deal with the earnings cap.
But he said there would be a transition cost because of the vast amount of calculations involved.
He added that there would be an additional bout of expenditure in 2010 – the proposed date for raising the early retirement option from 50 to 55.
He explained: “The proposals will make day-to-day life simpler but involve a large amount of investment.”
And Clark said that while statutory money purchase illustrations for DC members were “a great idea” there was “a very short amount of time” to make changes to them.
He said: “In terms of best practice, the SMPI should include a range of projections – a single figure is misleading and will require an explanation each year about the change [in pension value].
“You also might want to produce a more realistic projection for those members approaching retirement,” he added.
The Pensions and Lifetime Savings Association (PLSA) has announced it will shrink its board by more than one-third as part of a governance overhaul to make it "agile and more appropriate".
Smaller FTSE 350 defined benefit (DB) schemes were nearly 15 percentage points less well-funded than larger schemes in 2017, according to a Goldman Sachs Asset Management (GSAM) analysis.
The advent of collective pension systems could help the UK avoid demographic challenges which will make it "impossible" for society to help savers in retirement, experts say.