The Private Pensions Revolution
Baroness Ros AltmannMinister of State for Pensions
TUC AnnualPensions ConferenceFreedom pass:Wherenow for workplace pensions?Thursday 4th February 2016
Private Pensions Policy Reform
Automatic EnrolmentFreedom and ChoicePotential changes to tax reliefPension Wise
Automatic Enrolment
Employer helps individuals build pension savingsThe new social norm –employer pays tax, NIandpensionSuccess so far is encouraging; low opt outSignificant challenge still ahead –1.8m employers yet to startAuto-escalation for thefutureHow will they find a good scheme?Net pay vs. Relief at source
Workplace Pension Recent Developments
Keeping the earnings trigger at £10,000 to bring more people into Automatic EnrolmentPension coverage is already increasing – especially for womenContribution increases now aligned with tax years – this will help reduce opt outsImproving consumer protection
Better workplace pensions
Automatic enrolment has created new responsibilities on Government and industry to protect saversChargecapin defaultfundsBanon active member discountsBan on commissionIGCsand trusteesmust assess valuefor money formembersIndustry to devise new products and services
Pension flexibilities – where we are
More freedom and choiceover howto access pension savings after age 55Nolonger have to buy anannuityInstead can chooseto takemoneyin a number ofwaysPension Wise offers unbiased guidance on optionsWant people to wait longer, not spend pension too soon
Advice & Guidance
Pension Wise- Government set-up free, unbiased help/guidance for age 50+- helpspeopleunderstand newflexibilitiesandright retirement optionTwo public consultations on advice and guidance:FinancialAdvice and Markets Reviewconsidersways to improve the availability offinancial advicePublicfinancial guidance consultationconsiders ways to improve free, impartial financialguidanceWill report soon
Challenges for the industry
Automatic Enrolment minimum is only a startIndustry challenge to make pensions more attractive to customersDevise good new products and servicesEngage customers to encourage more saving or auto-escalationAdapt to new freedoms
DB developments
Big rise in deficitsChallenges as contracting out endsGMP reconciliation and equalisationTrustee burdens - professional and lay trusteesInvestment challenges, diversification and riskReduce regulatory burdens, improve sustainability
Summary
Long-term saving can help individualsandeconomyBut pensions are aboutpeoplenot just moneyProviders, employers and Government must consider thepeoplepaying into pensionsImprove later life income for as many as possibleMake the most of the Pensions revolutionGreat opportunityfor new, engaging products and services
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