What’s next for UK pensions?

 Since the introduction of auto-enrolment in 2012 and Pension Freedoms in 2015, the UK pension landscape has remained relatively unchanged. However, 2023 brought with it a significant increase in government consultations relating to pensions and the first bill relating to changes to Auto-Enrolment since the Pensions Act 2008 received Royal Assent.

As workplace pension advisers, we understand the importance of keeping our clients updated with these changes well before they come into force.

Our latest report, ‘What’s Next for UK Pensions?’ is designed to give companies an overview of the workplace pensions landscape in 2024 and sits alongside our Annual Workplace Pension Governance report.

It covers plans that are in progress, including the Mansion House Reforms, Pension Dashboards and the Extension of Auto-Enrolment legislation,  highlighting how these changes will affect an employers workplace pension and the members of the scheme.

In the pipeline, the Department for Work & Pensions, the Financial Conduct Authority and The Pensions Regulator are consulting on what it means for a pension to provide ‘value for money’ and to look at building a framework on metrics, standards and disclosures. Driving a long-term focus on value for money across the pensions sector has been described as ‘a key priority for this Government’. Likewise, the Shadow Chancellor, Rachel Reeves, has stated that Labour would review the entire pensions landscape to ensure it delivered “full potential” for savers and companies. What this means in practice for both employers and employees, we’ll have to wait and see.

In addition the plan to introduce a ‘multiple default consolidator model’ to enable a small number of pension schemes to act as a consolidator for small pension pots (those worth under £1,000) was put forward in the Autumn Statement 2023. This ‘auto-consolidator’ plan has been generally welcomed by the pensions industry, as there are over 12 million deferred pension pots worth below £1,000, with a combined value of around £4.2 billion.

Finally, the idea of a ‘pension pot for life’ was floated but received a far less enthusiastic response.  Leading figures in the  industry reflected views such as “an absolute nightmare”, while the Society of Pensions Professionals said it raised grave concerns and the Trades Union Congress described it as a “dangerous gimmick”. However,  the pension consolidator, PensionBee, expressed its support for consumers having one pension pot that they can choose themselves. Pensions industry stalwart, Tom McPhail, also urged the government to press on with the lifetime provider model as a solution to avoid people building up many different, small pension pots over their working life. If a change like this was made, we know that employers would face many challenges.

Our new report aims to help employers prepare for confirmed and proposed changes and understand the pension decisions their employees could be facing and how these changes, if implemented, could affect the workforce as a whole.

For our clients with  our pension governance service, we look forward to sharing this new report with you at our next annual meeting. If your business isn’t signed up to this service and you’d like to discuss Ink’s Workplace Pension Governance offer in more detail, please don’t hesitate to contact us.