Commenting on today’s release of the Pensions Scheme Review Report, Renny Biggins, Head of Retirement at The Investing and Saving Alliance (TISA) said:
“Pension schemes can play a pivotal role in boosting the UK economy – but there is still a way to go before we strike the right balance between encouraging investment and securing the best outcome for savers. We need to ensure we are incentivising schemes to invest in the UK, not forcing them down a path which could jeopardise member outcomes.
We generally agree that a more consolidated market will broadly generate better consumer outcomes, but it should be recognised that scale does not automatically translate into UK private asset investment. Economies of scale will make some asset classes easier to access but ultimately, schemes have a duty placed on them to make decisions which benefit their members. We have, of course recently seen the announcement of the Mansion House Accord which crucially still requires schemes to meet Consumer and Fiduciary Duty obligations. This is positive progress but does require a quid pro quo from Government to ensure there is a steady pipeline of appropriate investments for schemes to invest in. Currently, if all schemes were required to invest in this area, demand would outstrip supply.
We do welcome the added flexibility to DC consolidation timelines for smaller schemes. However, we urge the Government to consider member outcomes more consistently across the landscape. Without this, you will have future scenarios where multi-employer schemes, delivering strong VfM with £billions of AUM, are forced to close due to not achieving the required scale, while much smaller single-employer trust schemes can continue to operate where they are demonstrating VfM. We are also pleased to see that contractual overrides will be put in place for contract based schemes – this is essential to support the consolidation agenda.
We do need to consider what impact these reforms could have on other planned upcoming changes such as Value for Money. Many default arrangements currently in scope for VfM will disappear by 2030, so it is important that proportionality plays a key role here.
We look forward to continue working constructively with the Government to ensure changes to pensions scheme benefits members and support wider economic growth.
