Industry experts are emphasising the need for a pension reform agenda that addresses auto-enrolment, financial advice, pension dashboards, and the Value for Money framework following Labour’s General Election win last night.
Additionally, the upcoming pensions review could reshape workplace and private pensions, with experts calling for an independent Pensions and Savings Commission within Labour’s first 100 days in office.
Aegon UK pensions director Steven Cameron says: “The Labour Government’s promised review of the pensions landscape could have far-reaching implications for all aspects of workplace and private pensions. We’re calling on Labour to set up an independent Pensions and Savings Commission within its first 100 days of office.
“With pensions being such an important long-term savings vehicle for millions, changes shouldn’t be rushed. And however ‘super’ the Labour majority, cross-party support can offer stability and certainty. We need a well-thought-through, logically-sequenced reform agenda, and the pensions industry stands ready to support this.
“Labour is likely to have its own list of ideas to explore, with rumours of reviewing the pensions tax system. There, completing the regulations to abolish the Lifetime Allowance is particularly pressing. Labour is also coming to power with many of the previous Government’s pension plans still under development. To allow progress, we need clarity on which will continue, change or be cancelled.
“Aegon believes the Government’s first priority should be the planned enhancements to workplace pensions auto-enrolment, which have already received cross-party support and would boost pension pots for millions of employees. Second, we’d urge Labour to push ahead with the ‘targeted support’ proposals from the FCA and Treasury, offering a new form of much-needed financial help to those unable or unwilling to pay for full financial advice.
“Our third recommendation is implementing pension dashboards. These could be a game-changing way for individuals to track and engage with all of their pensions, and we urge Labour to make sure these go live by the 2026 target date. Fourth for us is the Value for Money framework, which is currently under development. This will create a transparent means of identifying poorly performing schemes and of making sure all members have confidence they’re saving in a good-value scheme.
“We’d put other initiatives, such as small pots consolidators and the controversial pension ‘pot for life’, on the back burner for now – once the priority measures are in place, these may simply not be needed.”
Broadstone head of policy David Brooks says: “Attention now turns to how it will deliver its pension promises and duties over the next five years. The manifesto contained a pledge to conduct a wide-ranging “pensions review” and we expect that this is likely to cover auto-enrolment given concerns over pension adequacy as well looking at ways consolidation can improve outcomes in the workplace pension market.
“Productive finance was another area Labour focused on in their manifesto but this push comes with a caution warning as there may be a disappointing uptake from defined benefit schemes however an ongoing review into VFM may allow more schemes to allocate long-term illiquid assets to this space. We would counsel caution in this space as these assets are not a one-way bet and the long-term interests of pension savers will need to be carefully balanced with the short-term needs of the country.
“With no mention of the Lifetime Allowance in Labour’s manifesto, we can probably assume it will not continue with previously announced plans to reverse the Conservatives’ abolition of this tax, but further detail will be needed around concluding the small print on its implementation. With a Pensions Minister to be appointed and a Kings Speech in just two weeks’ time, policy is likely to move quickly but we broadly expect continuity in the pensions market. There are already significant legislative processes underway which we anticipate will be continued – with the possible exception of the controversial pot for life proposals.”
PMI director of policy and external affairs Tim Middleton says: “There are many reforms required to the UK pensions system. Some, such as the new Defined Benefit Funding Code and changes to auto-enrolment, remain from the agenda of the previous Government. Others stem from the Labour Party manifesto: the new Government has committed itself to a review of the UK pension system, and we would greatly appreciate clarity as to what this review will address. In particular, we look forward to the appointment of a new Pensions Minister, who we greatly look forward to meeting in order to discuss the next chapter for pensions provision in the UK.”
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