With Ros Altmann confirmed as the next pensions minister, Alan Higham Retirement Director at Fidelity Worldwide Investment has put together a Ten Point Plan that Dr Altmann should keep at the forefront of her mind when starting her new brief.
The Conservatives said before the general election that their priority for pensions was to bed in the reforms announced in the last year. It is, therefore, essential that Ros Altmann works on tackling the below issues in order to ensure that pensions still continue to enjoy the rise in positive profile that started under the freedoms.
For us, the main ten points that need to be addressed are:
- Pension fraud is the primary risk to pension savings and more needs to be done to help prevent it. Resources must be found so that when attempted frauds occur these can be easily reported to the police/regulators who will investigate and take action. Occupational pension schemes are too easy to establish without adequate controls around governance and are a perfect vehicle for fraud.
- Monitor take-up on auto enrolment as it moves through the small business sector. There must be an emphasis on making sure there is suitable support for small business owners to comply with the policy easily and within the predicted costs. If not, then changes should be made as necessary in order to achieve this which may mean a review of the complexities in the system.
- Establish a review to identify the best way to encourage greater saving beyond the 8% required by 2018 from auto enrolment
- Complete State Pension forecast updates so that all those within 20 years of State Pension age can have a reliable forecast of their State Pension under the new rules
- Establish a formal procedure for reviewing and amending State Pension age based on regular longevity assessments. This will ensure that the pension remains affordable and sufficient notice is given to individuals to allow them to prepare for retirement
- Complete the policy details around compulsory transfers of money purchase pensions once people move jobs.
- Work out how to ensure pension freedom does not cost the tax payer huge sums in future welfare payments should people overspend – identify the potential risk areas and impact bringing forward suitable measures to manage the risks involved
- Look at those trapped in occupational pension schemes without a right to transfer who cannot access pension freedom
- Prioritise resources which would mean that we stop the defined ambition legislation and abandon the attempt to enable people to sell their annuity
- Establish a central, impartial, expert body to collect and analyse pension data to support good policy making across Government in all areas of pensions. This should not just be for occupational and State pensions but include tax policy and public service pensions too.