Chancellor of the exchequer Rachel Reeves has launched a review to boost investment, increase saver returns and tackle waste in the pensions system.
The review will be led by minister for pensions Emma Reynolds and will focus on defined contribution workplace schemes and the Local Government Pension Scheme (LGPS). It will look at how tackling fragmentation and inefficiency can unlock the investment potential of the £360 billion LGPS in England and Wales, which manages the savings of those working to deliver local services.
The first phase of the review will focus on driving scale and consolidation of defined contribution (DC) workplace schemes, tackling fragmentation and inefficiency in the LGPS through consolidation and improved governance, and encouraging further pension investment into UK assets to boost growth across the country. It will also look at the pensions ecosystem structure and achieving a greater focus on value to deliver better outcomes for future pensioners.
Initial findings will be reported later this year ahead of the Pension Schemes Bill. The second phase will start afterwards and will consider further steps to improve pension outcomes, including assessing retirement adequacy. The review secretariat will consult with industry voices and think-tanks as it develops its analysis and policy options.
Paul Waters, head of DC markets at Hymans Robertson, said: “There are opportunities for the government to help the industry to improve outcomes for DC pension savers. For example, building on the success of auto-enrolment to raise pension saving rates, leveraging the increasing scale of today’s DC schemes to access new investment opportunities, and enabling more sophisticated default retirement propositions to be introduced. We look forward to supporting the LGPS to leverage the review, and increased government attention, to continue to develop the scheme.”
Jamie Jenkins, director of policy at Royal London, added: “As widely trailed, the first phase of this review is primarily concerned with how pension assets can be invested in a way that helps grow the economy. However, there is a clear statement about how this must focus on the broader value delivered to savers, rather than just cost. It’s imperative that people’s retirement outcomes form the cornerstone of any proposals that emerge.”
