Where does this leave us as an industry?
The short answer is – waiting on the Autumn Statement as that is the likely moment for an announcement on what’s next for this government’s policy on pensions.
We know the Mansion House speech (the speech that launched a thousand consultations) was a point of co-ordination for ongoing and brand-new consultations focused on producing a source of investment for the government’s productive finance funded projects.
The lack of a Pensions Bill may end up having a detrimental impact on their progress. Some of these projects were progressing anyway but now by being caught in the crossfire they will be sidelined as the anticipated source of funds for this project from those initiatives, will be too slow or too nuanced to achieve the policy goal of more investment.
The assumption that there isn’t going to be parliamentary time for a Pensions Bill during this parliament means a significant delay for the long-term projects that have been discussed for a number of years. These include Value for Members, the end of the proliferation of small pots, superfunds and CDC. We also have the steps to review professionalism in trusteeship and DC decumulation.
It is possible that the overarching goal of government and regulators to consolidate the pensions market in both DB and DC spaces has been overtaken by events.
DB continues to be an area of rapid change. The recent deal by Clara and rumours of new players in the insurance market could mean that the requirement for more regulations and, in particular, a public sector consolidator have become less urgent. Both would still take a number of years to finalise, enact and in the case of the public sector clearly define, fund and establish (even with the PPF as the head start).
We keenly await the DB funding code to give the direction of travel. However, it is also important to note that we are still waiting for the dust to settle on the recent gilt yield rises and impacts on scheme funding. Modelling to date has been on a roll forward basis with differing outcomes and how rosy things really are (or aren’t) are yet to completely emerge.
DC – we have the competitive and regulatory pressure to consolidate. We also potentially have the threat of a small scheme premium of £10,000, thanks to the General Levy, which may just encourage schemes to consolidate faster to avoid it.
Here we are then, now waiting on every word from Jeremy Hunt’s lips on the 22nd which may define the industry focus for the next 12 months. (Of course we have a budget in Spring). But one can’t help wondering what Labour may have in store for us. On current polling they must be likely to form the next government and pick up the baton of these initiatives. Which will be continued and which will be dropped is an open question.
