LONDON (14 October 2019) - Aon plc (NYSE:AON), a leading global professional services firm providing a broad range of risk, retirement and health solutions, has said that the Pension Schemes Bill, announced today, includes important new details on measures for the UK pensions industry.
Matthew Arends, head of UK Retirement Policy at Aon, said:
"Given the distractions elsewhere, it’s good news that the government is pressing ahead with key elements of pension innovation in a Pension Schemes Bill. The three areas of Collective Defined Contribution (CDC), the Pensions Dashboard and the Pensions Regulator’s (TPR) powers are overdue changes that should each provide pension savers with better outcomes. However, there was no mention of other key pensions topics and we continue to wait on the next phase of automatic enrolment and on the regime for defined benefit (DB) commercial consolidators, for example."
CDC
Matthew Arends, head of UK Retirement Policy at Aon, said:
"Given the distractions elsewhere, it’s good news that the government is pressing ahead with key elements of pension innovation in a Pension Schemes Bill. The three areas of Collective Defined Contribution (CDC), the Pensions Dashboard and the Pensions Regulator’s (TPR) powers are overdue changes that should each provide pension savers with better outcomes. However, there was no mention of other key pensions topics and we continue to wait on the next phase of automatic enrolment and on the regime for defined benefit (DB) commercial consolidators, for example."
"Having said that, we expect this to be Phase 1 of CDC, which will enable single employer plans. We call on the Government not to stop here, but to press on with Phase 2, enabling multi-employer and commercial CDC plans. This will enable all UK retirement savers to take advantage of a pension for life with a fixed cost."
The Pensions Dashboard
Matthew Arends said: "The effects of auto-enrolment, coupled with the increased likelihood of UK workers to change roles every few years, has only increased the need for the Pension Dashboard. It will be a much-needed way for savers to keep track of their various pensions.
"However, ONS figures show that pensions savings in the UK amount to approximately £8 trillion, of which £4 trillion relates to state pensions, £3.3 trillion to public and private sector DB pensions, and £0.8 trillion to DC pensions.”
Matthew Arends continued:
"While implementing a dashboard for DC pensions is clearly of benefit to the millions of workers with those types of pension, these figures demonstrate that until the dashboard includes state pensions and DB pensions, it will only be addressing the tip of the iceberg.
“We recommend that in an initial phase, DB pensions could be included by providing contact information and information to identify members, but not full benefit details. This would allow lost pensions to be found - and without needing over 5,000 DB schemes to provide detailed information."
TPR Powers
Matthew Arends said:
"The Department for Work and Pensions (DWP) consulted on TPR powers way back in June 2018 and proposed additional information requirements for Notifiable Events and Declarations of Intent relating to potential business transactions, penalties for wilful or reckless behaviour towards pension schemes and further anti-avoidance powers. The crucial aspect with all these elements is what the practical implementation will be – we do not want to see a repeat of the experience of the original TPR clearance process which rapidly fell into disuse when companies generally felt it did not add to the process.
"We are also curious how the upcoming consultation by TPR on the new funding code will mesh with the new powers. For example, TPR has increasingly drawn attention to the question of ’deficits versus dividends’, but if there are no new powers in this area, how will TPR enforce its views when it is not enshrined in law? We await TPR's consultation with interest."
Missing areas
Matthew Arends said:
"It is reassuring to have progress on these three key areas, but some other significant pensions areas were not mentioned. For example, there is no mention of automatic enrolment (AE), so employers will need to focus on ensuring their employees are getting the most out of pensions in the absence of further rises in the minimum contribution rates. And the self-employed continue to remain outside of AE.
"Similarly, the development of the regime for commercial consolidators was not mentioned and so may not be included in the Bill. This would simply increase the frustration of certain employers and trustees who are wanting to make use of these vehicles to provide benefits for their DB members.
"We look forward to developments in both these areas in the future."
Media Contact
Colin Mayes
Aon
07801 748138
[email protected]
Tommy Cooper
Kekst CNC
07983 921719
[email protected]
2015 figures taken from the ONS report "Pensions in the national accounts, a fuller picture of the UK’s funded and unfunded pension obligations: 2010 to 2015".
Notes to Editors
About Aon
Aon plc (NYSE:AON) is a leading global professional services firm providing a broad range of risk, retirement and health solutions. Our 50,000 colleagues in 120 countries empower results for clients by using proprietary data and analytics to deliver insights that reduce volatility and improve performance.
Aon announced in May 2018 it will retire the business unit brands of Aon Benfield and Aon Risk Solutions, which follows the retirement of the Aon Hewitt business unit brand in 2017. This move was designed to increase the rate of innovation across the firm and make it easier for colleagues to work together to bring the best of Aon to clients. Aon has five specific global solution lines: Commercial Risk Solutions, Reinsurance Solutions, Retirement Solutions, Health Solutions and Data & Analytic Services.
Follow Aon on Twitter: @AonRetirementUK
Sign up for News Alerts: http://aon.mediaroom.com/index.php?s=58