Pensions provider Aegon has called on the new Labour government to establish an independent ‘Pensions and Savings Commission’, after the party secured a sweeping victory in the 2024 general election.
Steven Cameron, pensions director at Aegon UK, said: “The Labour government’s promised review of the pensions landscape could have far-reaching implications for all aspects of workplace and private pensions. To kick things off, we’re calling on Labour to set up an independent Pensions and Savings Commission within its first 100 days of office.”
He said that with pensions being such an important long-term savings vehicle for millions, changes shouldn’t be rushed.
“And however ‘super’ the Labour majority, cross-party support can offer stability and certainty. We need a well-thought-through, logically-sequenced reform agenda, and the pensions industry stands ready to support this.”
Pension policy hangover
Cameron said that new Labour ministers are likely to have their own list of ideas to explore, with rumours of a review of the pensions tax system. With this in mind, he said that completing the regulations to abolish the lifetime allowance would be “particularly pressing”.
“Labour is also coming to power with many of the previous government’s pension plans still under development. To allow progress, we need clarity on which will continue, change or be cancelled.”
He said that his firm believe the government’s first priority should be the planned enhancements to workplace pensions auto-enrolment, which have already received cross-party support and would boost pension pots for millions of employees.
He also urged Labour to push ahead with the targeted support proposals from the Financial Conduct Authority and Treasury, which he stated offer a new form of much-needed financial help to those unable or unwilling to pay for full financial advice.
Implement pension dashboards
Pension dashboards were also on Aegon’s list of pension priorities for the new government.
Cameron said they could be “a game-changing way for individuals to track and engage with all of their pensions”. He urged Labour to ensure they go live by the 2026 target date.
The value for money framework, which is currently under development, was also flagged for attention by Cameron. He said: “This will create a transparent means of identifying poorly performing schemes and of making sure all members have confidence they’re saving in a good-value scheme.”
He said the government should “put other initiatives, such as small pots consolidators and the controversial pension ‘pot for life’, on the back burner for now”, adding that once the priority measures are in place, these may not be needed.
Auto-enrolment extension
Jon Greer, head of retirement policy at Quilter, said that Labour’s pension review aims to overhaul the current system, potentially extending auto-enrolment and adjusting contribution thresholds to make workplace pensions more accessible.
“This is critical to ensure more people are saving more for their later life, while putting additional funds to work in the market,” he said.
“The pension review is also likely to explore productive investment strategies, leveraging pensions to stimulate the UK economy in a continuation of Jeremy Hunt’s Mansion House reforms to encourage pension funds to disclose and invest more in UK assets.”
Greer said that the introduction of collective defined contribution (CDC) schemes, where both employers and employees contribute to a collective pot, are likely to be on the agenda. However, the practical implications of these proposals remain to be seen, he said.
“The government must provide clear, actionable steps to ensure these reforms effectively enhance retirement security.”
Pension policy to ‘move quickly’
David Brooks, head of policy at independent consultancy Broadstone, said he expected that the new government’s pledged ‘pensions review’ would cover auto-enrolment given concerns over pension savings adequacy.
He expects that the review will look at ways consolidation can improve outcomes in the workplace pension market.
He highlighted productive finance as another area of focus for Labour. However, he cautioned that “there may be a disappointing uptake from defined benefit schemes”.
“However an ongoing review into value for members may allow more schemes to allocate long-term illiquid assets to this space,” Brooks added.
“We would counsel caution as these assets are not a one way bet and the long-term interests of pension savers will need to be carefully balanced with the short-term needs of the country.”
Lifetime allowance
He said: “With no mention of the lifetime allowance in Labour’s manifesto, we can probably assume it will not continue with previously announced plans to reverse the Conservatives’ abolition of this tax, but further detail will be needed around concluding the small print on its implementation.”
Brooks predicted that pension policy will “move quickly”, but also that there will be continuity in the pensions market.
“There are already significant legislative processes underway which we anticipate will be continued – with the possible exception of the controversial pot for life proposals.”
