We are the voice of insurance and long-term savings | Contact us

Pensions aren't broken - but they're work in progress

Yvonne Braun Yvonne Braun, Director of Policy, Long-term Savings and Protection

On Saturday, the Daily Telegraph launched a 19 point campaign for reforming the pensions system to ensure everyone can engage without specialist knowledge and improve their decisions when it comes to pensions. Its central diagnosis, or at least headline, was that Britain's pensions are "broken".

The UK pension system is not broken, but a belief in the need for reforms is shared broadly across industry, regulators, consumer bodies and Government. Not only that - a huge amount of work is already in train to make many of the 19 recommendations a reality.

Giving people a simple way to find out about their private pension is indeed key. This does not only relate to what people can expect at retirement but needs to give people an easily accessible overview of their various pensions so that they can get a sense of the totality of their savings. This will become ever more critical as people can expect to work in 11 different jobs during their working life - with auto-enrolment in pensions leading to potentially 11 different pots. It would take enormous self-discipline to collect statements from 11 different pensions and go through these to add it all up.

Happily, the industry has been working with the Money Advice Service and the Government Digital Service for almost a year on the first phase of a digital pension dashboard which will deliver precisely that - an easy, on-line tool giving people access to all their pension savings and entitlements in one place. And by the way, this is intended to include the State Pension too. The ABI will host the launch of the Pension Finder report this coming week and our members are ready to deliver the next phase of this project.

And yes, jargon is a significant obstacle to getting people engaged with pensions. To change this, the ABI is consulting on a Pension Language Guide. This aims to ensure that the new choices after the introduction of the Pension Freedoms are explained as simply as possible and in the same way by all organisations speaking to people about pensions, from the public guidance services, to advisers, providers, and the media. Our consultation is based on consumer research - it is open until June 19th and we'd love to hear from all with an interest in the subject.

We also agree that creating rules of thumb to help people work out how much they should save into their pension is a key ingredient for success. In fact, it is so important that it was identified in March by the financial regulator and the Treasury as a key recommendation of the Financial Advice Market Review. The Financial Advice Working Group has now been tasked with precisely this.

Exit fees for pensions are also being tackled - a consultation paper by the financial regulator on capping these is expected imminently. Administration costs for auto-enrolment pensions are capped at 0.75% of a fund's value per year. And much work is in train by the industry, Government, and regulators, both here and in the EU, to enable firms to communicate to customers the costs of buying and selling assets in a consistent and meaningful way.

The fact it's a 19-point campaign is itself a sign of how important pension reform is. On plenty of the other issues identified – such as advice, reform of tax relief and the need for an independent commission – the ABI has long been vocal about what should be done. Progress on all of these would benefit savers and the pensions industry is firmly in support.

We look forward to seeing how the campaign progresses. But we are clear - Britain's pensions aren't broken, and their imperfections are being addressed.

Last updated 29/06/2016