SPP calls on Pensions Commission to tackle 'systemic gaps'
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The Society of Pension Professionals has published a paper setting out where it thinks the new Pensions Commission should focus its efforts, including a definition of ‘adequate’, a closer look at the trade-offs between saving and living standards, action on “systemic pension gaps”, and improving the public’s trust in state provision.
The paper entitled, 'Saving retirement: who is at risk and why?' sets out what issues the SPP believes the commission announced last month should tackle, as the Department for Work and Pensions found 15m could reach retirement with insufficient savings. The Pensions Commission, made up of Baroness Jeannie Drake, Sir Ian Cheshire and Professor Nick Pearce, is due to report back in 2027. SPP president Sophia Singleton said: “The SPP hopes that this wide-ranging paper proves useful in stimulating debate, thought and most importantly, action, on what is arguably the biggest pensions challenge faced to date. As this paper makes clear, government, industry and savers can all do more, and we all need to if we are to achieve the shared goal of an adequate retirement income for all.”
Along with increasing minimum auto-enrolment contributions, the SPP recommends, among others:
giving 2.3m carers earning no incomes 'carer credits' towards their pensions;
recognising employers making 12% or higher contribution rates, such as through an additional tax rebate;
allowing employees to opt-down or opt out while keeping the employer contribution;
increasing the £2,880 limit on which pension tax relief is available to non-taxpayers; and
extending automatic enrolment to the self-employed.
The commission should also consider increasing the availability of pooling arrangements through expanding the list of authorised benefits provided by pension schemes, the SPP said, such as long-term care and medical support for critical illness, while promoting the delivery of collective defined contribution schemes.
The paper has a focus on underpensioned groups and calls for action on “systemic pension gaps” affecting people according to their ethnicity, gender, LGBTQ+ and disability.
It suggests modifying the rules for means-tested benefits so that pension contributions do not disproportionately reduce entitlements, examining the potential for pension sharing on separation, ensure those returning from career breaks understand how to make up for any gaps, and clarify what the employer is contributing during parental leave.
The SPP said pensions should become part of financial education in schools, and employers with 250+ employees should have to provide ongoing financial education to their workforce.
What are your thoughts on the SPP's recommendations?
