Industry needs support as member protections are ramped up – PPI
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New burdens put on the pensions industry to mitigate risks for savers must be supported by the government, the Pensions Policy Institute has said as it publishes the tenth edition of The DC Future Book.
As investment, longevity and other risks linked to pensions are being shifted from employers onto individuals, policymakers are trying to mitigate these with new rules and projects, including a new value for money framework, pensions dashboards and small pot consolidation.
The PPI said the industry should get support in adjusting to these: “Each of these initiatives places an onus on industry to adapt and develop, which must be supported by government, while ensuring costs for members don’t rise unduly.”
The report, produced in association with Columbia Threadneedle Investments, also noted that greater use of private markets – advocated by the government – must be made with care.
Shantel Okello, PPI policy researcher, said any move towards more private market investment “will need to be carefully handled in order to ensure that schemes still put the needs of their members at the forefront and that market supply issues don’t cause scarcity.”
Aside from investments, the research highlights wider issues that continue to blight DC. Amid the rapid expansion of auto-enrolment, the number of ineligible employees has risen at a similar rate, it finds, while there continues to be a risk of poor decision making in decumulation.
Andrew Brown, institutional business director at Columbia Threadneedle Investments, pointed to other issues with DC, including small pot sizes and current projection.
“To ensure good outcomes for DC scheme members, collaboration between policymakers and providers will be paramount, addressing issues such as high costs and regulatory complexities,” he said.
