Frank Field: Consolidating DC pots is challenge but benefits are considerable
The UK must do much more to consolidate scattered pots over the coming years as the benefits for savers are massive says MP Frank Field.
In an exclusive interview with PP, Field, who was re-elected chairman of the Work and Pensions Committee (WPC) at the beginning of July, believes consolidation can solve many weaknesses that arise from fragmentation. Successful consolidation can curb issues such as meagre returns on member contributions, nearly untraceable pots and excessive bureaucracy.
Field pointed to the example of Denmark, which has fully funded defined contribution (DC) plans that cover 90% of the workforce.
Field said: "We could be doing a lot more to consolidate pensions so instead of small pots in many places, we can look to countries like Denmark where pensions are 30% better in terms of what savers ultimately get [in retirement].
"If we can push down costs, then it will not be so easy for administrators to nibble away at the value of pots by increasing fees."
Economies of scale from consolidation would also help retrieve some notion of protection for savers, which Field believes has been lost over the time.
"We need to recreate that collective protection - which has been lost - by remodelling DC pensions to spread risk, reduce costs and improve what individuals get out of the system," he added.
The issues the WPC will look at and the agenda it will set during this period of parliament will mainly build on the work from the last one.
"We are going to have a very active committee on pensions in terms of shining a light on those worst employers like Sir Philip Green who we feel have not done their duty. We are going to be on them and expose their behaviour to the public's gaze."
More on Industry
Have you say: Do you think Rishi Sunak should freeze the lifetime allowance?
In this week's Pensions Buzz, ahead of Wednesday's Budget, we want to know whether you think Chancellor Rishi Sunak should freeze the lifetime allowance.
Industry Voice: Tech innovations for pensions needn't come from inside industry
Interactive digital dashboards, cloud-based platforms, artificial intelligence and machine learning – all of these have a place in the exciting future of the pensions sector.
LawDeb grows pension revenues by 8.3%
Law Debenture posted £11.5m of revenue in its pension business in 2020, growth of 8.3% on the prior year, with its governance service receiving enhanced activity.
Five stories you may have missed this week
This week’s top stories included a legal challenge over the government’s Retail Prices Index realignment, while British Airwards deferred £450m in deficit recovery contributions.
PLSA: Most pension tax reforms will leave things worse and schemes at risk
Most reform options for pension tax will leave many savers with smaller pots and cause substantially more costs for schemes and employers, says the Pensions and Lifetime Savings Association (PLSA).
Most read
