The issue of funding private pensions adequately, so that those who quit work can actually live comfortably is something of a Gordian Knot. For the last 2 decades wealthy people in the UK have acquired buy-to-let properties as a pension plan, but it seems Labour and global VC interests might remove that option soon. Or at least tax it so harshly that the profits accrued from sales provide a relatively small lump sum in 30 years time.
Demanding by law that pension scheme managers invest in social housing, Net Zero approved energy, or diversity projects plus carbon capture, more EV infrastructure, weather modification etc. might suit politicians aims today, but it’s unlikely to provide large percentage returns which pensioners need to fund a potential 30 year stretch of retirement and possible care home fees.
Here are some comments on the proposed changes in the Pension Schemes Bill;
Responding to the UK Government’s release of the Pension Schemes Bill, Debbie Webb, Pensions Board Chair at the Institute and Faculty of Actuaries (IFoA), said:
“The Pension Schemes Bill is an ambitious and significant step in facilitating change to the UK pensions system. We remain supportive of the Government’s efforts to improve outcomes for pensions savers and stimulate more growth in the UK economy. The Bill has many positive aspects, including rules that allow surplus funds in defined benefit (DB) schemes to be used to help members, employers, and the economy. It is positive that the Government recognises that trustees are best placed to make decisions on surplus. Stakeholders will need time to review the bill in detail, though we look forward to working with government and the Pensions Regulator to ensure that the requirements are clear, practical and scheme specific, but ensure members’ benefits are protected and avoid unintended consequences.
“We are also pleased to see progress through the Bill on numerous other issues. These include consolidating small defined contribution (DC) pots, introducing DC decumulation requirements and helping DC schemes to deliver value for money, as well as legislation to support the creation of superfunds.
“The IFoA believes that the foremost purpose of DC pension schemes is and will always be to provide good outcomes for members in retirement. With regards to provisions in the bill on pension scheme investment, the needs of pension savers should be the driving factor in investment decisions. This means government must balance the need for sufficient investment in growth assets with the associated risks and costs.
“Consolidation can help access economies of scale and improve governance but does not come without risk. Compulsory investment in certain sectors (such as unlisted UK assets) may expose schemes and members to higher investment risk, costs, reduced liquidity, and lower diversification.”
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