The Government has published its final report and outcomes to the government’s Pensions Investment Review (PIR) and consultation on Options for Defined Benefit pension schemes.
In response,
Hannah Gurga, ABI Director General, said: “As key investors in the UK economy, our industry welcomes the Government’s continued focus on boosting growth. Pension providers, including signatories of the Mansion House Accord and Bulk Purchase Annuity insurers, have already pledged to invest more in the UK. And pension investments will always be made in savers’ best interests, and with a view on the long-term.
“We’re pleased to see the government’s commitment to the next phase of the review, focused on ensuring the adequacy of pension outcomes and tackling the issue of under saving. We’ll continue to work with our members, government and wider industry to ensure pensions deliver the best value for savers.”
On the Pension Investment Review, Rob Yuille, Head of Long-Term Saving Policy at the ABI, said: “Pensions are for the long-term, and investments must be in savers’ long-term interests. This Review, and initiatives such as the Mansion House Accord, help to create the right conditions for investment, and we welcome the government’s commitment to enabling this through a suitable pipeline of opportunities. Mandating investment is not necessary, and it’s crucial that firms retain the power to make investment decisions in the best interest of scheme members.
“Consolidation is already happening at pace in the DC market, so a pragmatic approach to the scale tests will ensure those providers who are on course to scale are recognised, and the market remains open to new entrants.
“Key enablers are needed for greater investment in private markets. We welcome the government’s intention to bring forward necessary legislation to introduce the value for money framework, and enable providers to consolidate pension arrangements in bulk, where it’s in customers’ interest.”
On the DB options government response, Hetty Ahern, Head of Long-Term Saving Policy at the ABI, said: “The government is right to highlight that the commercial Bulk Purchase Annuity market continues to innovate and cater to the needs of defined benefit (DB) pension scheme members, trustees and sponsoring employers. As we continue to see this market evolve, we welcome government’s recognition that more analysis is required to identify the need for a public sector consolidator.
“On surplus extraction proposals, DB scheme members will want confidence that this will only happen once the core purpose of the scheme – to pay members their pensions – is met. It’s right that the government has committed to protecting member interests, but we maintain that the safest funding threshold for members, before surplus is extracted, is buyout levels. We look forward to continuing to work with government and the regulator as they develop the detail of these proposals.”