There are always two parts to an election: ideas and rhetoric, and then detail and delivery.
The first part sets an outcome, the second sets a route-map to get there. To me, both are important. Being able to describe what we intend to do is just as important as setting out how to achieve the goal.
The King’s speech marked the beginning of the detail and delivery phase for this first term, and included a number of measures for pensions and long-term savings, largely covering activity already in progress: addressing the issue of small pots, for example, governance of final salary superfunds and warning about the danger of pension scams.
While it excluded any reference to the Extension of Auto-Enrolment Act that passed nearly a year ago, I was particularly pleased to see the government talk subsequently about “assessing retirement adequacy” as part of its much-anticipated Pension Review.
My hope is that this will look to implement the changes already agreed in the Act by reducing the age of the eligibility age for auto-enrolment from 22 to 18 and by removing the lower earnings limit so people can save from the first pound earned. I am keen to see this implemented quickly as delays stop the UK’s youngest employees from saving and benefiting from contributions made on their behalf by their employer.
There is scope to go further and look at the adequacy of contribution levels against the outcomes they will deliver, something for which Standard Life has championed by setting out an economic framework on how and when to deliver an increase in contributions.
Fewer than one in five taking support before making often irrevocable decisions about their financial futures
I expect that the way those contributions are invested will be part of the Review, taking due consideration of the opportunities to invest in the UK and a focus on economic stimulus as well as adequate savings for customers.
Of course this is not just a drum for the providers to beat, but employers have a role to play that extends further than paying their share of the contributions made on behalf of their employees.
We have just heard details from the FCA around their renewed focus on Value for Money, which links to the Consumer Duty regulations.
Those regulations were road-tested successfully by FCA with the industry, and our team participated fully in the consultation phases before implementation. This gave us the chance to express our opinion of the key elements of the proposed regulations and to influence the final outcome, keeping our core tenet firmly in mind so that our customers and their interests were properly represented.
That focus on Value for Money allows the adviser community to continue its work on the assessment of propositions through the marketplace, working with clients to identify the correct solutions based on their personal and financial circumstances. It also allows us to continue to prove the value that we provide.
As those who have followed my earlier articles will be aware, I am determined to address the ongoing issues in delivering advice and/or guidance to consumers. The statistics speak for themselves, with fewer than one in five taking support before making often irrevocable decisions about their financial futures – particularly at retirement.
The new government has emerged from the election with a mandate to make significant change
The question of why so few take up support is open to debate, with the saver’s hesitation potentially rooted in uncertainty of the question to ask, or whether they will understand the answer (as I have argued before).
I acknowledge that while the need for advice and guidance seems clear, the solution becomes murky – but I welcome the willingness of the FCA to consider options from the industry so they can benefit from experience offered by providers, advisers and our industry bodies. This is an area I hope Labour will prioritise this year to ensure savers can get good outcomes.
I appreciate that the pensions industry is a part of a wider economy facing pressure from all sides – we have already seen the new Chancellor make changes to winter fuel allowances, and I have heard the mutterings around reform of the tax system covering contributions into pension arrangements. If political momentum can power decisions like those, it can drive through much-needed changes like the extension of auto-enrolment, and to encourage the use of advice and guidance.
The new government has emerged from the election with a mandate to make significant change and impetus to begin immediately. The time of detail and delivery has started and I hope that it will continue with the level of openness we have noted in our interactions with the new Government.
Andy Curran is chief executive of Standard Life
Fit for a king? Probably Canute. If the rumours about pensions are true, it is hardly likely that it will encourage investment into pensions. We have already seen the stats. showing that an ever increasing number are turning to ISAs – hardly surprising as people are getting heartily sick of governments treating pensions like a football. The best pension policy is probably ‘Leave well alone’
The State Pension Scheme is a Ponzi scheme.
It was devised by Academics, who with their superior intelligence quickly realized that the average heavy manual worker then had a life expectancy of around 65 years.
Since there were no JCB’s etc in those days, there were a lot of manual workers/labourers. On the other hand, people who used their brain power rather than muscle tended to live longer to around 74 years.
So a male retirment age of 65 was adopted, meaning that the ‘working man’ subsidised the academic level of society. Neat.
Ideas and rhetoric, then detail and delivery are four not two parts to an election.