A poll of 200 pension scheme representatives revealed that only 30% are currently broadly supportive of the Chancellor’s plans to encourage pension schemes to invest for growth as outlined in his Mansion House speech on Monday.
The results suggested that industry views on how to encourage pension schemes to invest in economic growth differ from those of the Government. Only 4% thought more trustee training – a key area that Government is investigating as a solution to improve investment practices – would have the most impact. In contrast, 43% believe a fundamental change to the flexibility of funding and investment regulations is the most important change needed to allow more investment by DB schemes in UK growth assets.
The poll was carried out at an XPS Pensions Group online event titled ‘The Role of Pensions in UK Economic Growth’, with over 400 industry attendees and which featured Work and Pensions Select Committee Chair Sir Stephen Timms and Margaret Snowdon OBE, Chair of the Pension Scams Industry Group.
The results suggest broader engagement is needed on the Government’s plans. The consultation on DB options is very limited with a short time over the summer to reflect on the options. Ideally given potential consequences, this should reflect a broad range of options from across the industry, with proper time to assess the impact and safeguards of the options.
The Work and Pensions Parliamentary Select Committee is carrying out a wide-ranging investigation into DB pensions, but this is only expected to report next year well after Government plans to announce its policy in the Autumn statement.
Commenting on the results, Wayne Segers, Partner at XPS said, “Any fundamental change to UK pension policy requires careful scrutiny and consultation to ensure that the most important outcome – protecting the savings of members – is upheld. UK DB pension schemes are around 95% funded against insurer funding levels and have much improved security for members. We believe there are several policy changes that can help improve efficiencies in DB pensions, notably looking at rules on surplus to improve employee savings and investment in businesses.
“Our poll has showed that there are a variety of views within the industry, highlighting the importance of the Government seeking a range of views through an extended consultation process. Whilst we are very supportive of a rethink in policy that can help improve outcomes for members and lead to more diversity in pension investment, we believe such fundamental change should not be rushed over the summer.”
