The SPP has raised concerns about the DWP’s proposed lifetime provider model for DC pensions.
The SPP expresses worries about potential employer disengagement, poor quality, adverse selection, and the additional complexity of system modifications and payroll while acknowledging the DWP’s efforts towards a sustainable pension scheme.
The SPP recommends that before considering drastic new reforms, it is necessary to give ongoing initiatives, such as addressing small pots, consolidation plans (like the VFM framework), pensions dashboards, increased pension investment in “productive finance,” and the implementation of CDC, time to succeed.
The SPP highlights that putting the burden of making important decisions on savers could result in less-than-ideal outcomes because many lack the required resources and expertise. It emphasises the value of committed assistance during the decumulation stage.
SPP defined contribution committee chair Giannis Waymouth says: “Although a lifetime provider model sounds like it could address with simplicity some of the ills affecting current DC pension, in reality, it has the potential to create more problems than it solves and to drive down the quality of pension provision.
“Severing the employer link and putting all the decision-making burden on savers could lead to sub-optimal decisions, as well as reducing market innovation and competition. DWP should give time to recent policy developments and initiatives in the DC space to bed down before moving forward into uncharted territory, in particular when potential harms are higher than the expected benefits.”
The post SPP questions DWP’s proposed Lifetime Provider Model appeared first on Corporate Adviser.
