As predicted before the chancellor’s spring statement, Rachel Reeves offered no update on the second phase of the government’s landmark pensions review.
This is despite a major government focus on the power of pensions to unlock investment in the economy, observed Mike Ambery, retirement savings director at Standard Life, part of Phoenix Group.
He pointed out that pension changes have been frequently referenced by the chancellor ahead of the forthcoming publication of the Pensions Investment Review.
However, he said: “There was no mention today of the second phase, which will examine the equally important issue of savings adequacy and whether the pension system is on track to deliver the outcomes people want and expect.
“After speculation earlier this year that the review had been postponed, we’re hopeful that we will hear more on the timings for review in the coming months/weeks.”
He acknowledged that increasing pension contributions at a time when economic growth is in short supply is “a difficult message to manage”, but said that “ultimately action needs to be taken as only one in seven people are on track for retirement”.
Ambery said: “The adequacy review provides an opportunity to look at how this challenge is addressed over the long-term with the potential for a roadmap of changes giving individuals and business certainty about what to expect. Doing so will not only lead to better savings outcomes for individuals but also has the potential to create additional investment in the UK.”
Steven Cameron, pensions director at Aegon, said the statement included a single pensions mention relating to future changes to pension scheme investments.
“This is likely to lead to workplace pensions placing more of their members’ funds in investments designed to boost UK economic growth, while also hoping to deliver better returns for pension savers. We look forward to more detail in the Pensions Investment Review, due to report back next month.
He added: “We hadn’t expected anything new on pensions in the spring statement, with the autumn budget the forum for announcing tax reforms, and details of the government’s three-year spending review expected in June.”
Cameron said that this summer’s Pension Schemes Bill will include new measures to ensure all pensions offer good value for money and plans to consolidate small pension pots that people may have left behind when changing employers.
“Furthermore, we expect new requirements for pension scheme trustees to go further in designing default retirement income strategies for members who do not want to make choices for themselves.”
Hargreaves Lansdown head of retirement analysis Helen Morrissey said the statement has been “a quiet one for pensions”, which was “something to be grateful for”.
“There were no big announcements affecting workplace or personal pensions and state pensions were spared from the previously announced benefits overhaul. The chancellor has made clear that major announcements around tax would be kept to the autumn budget from now on and this can give valuable breathing room for long-term planning.”
She said people need certainty to plan for retirement as they don’t want their hard work to be undone further down the line by “an ill-timed tax tweak”.
“This will fuel confidence as investors look to the end of the tax year and forward to the next, that they can make best use of their pension and ISA allowances to build a financially resilient retirement.
“There is of course still the outcome of the Pensions Review to come imminently, but this will focus more on the structural make-up of the pensions system. What is critical here is ensuring that end-user choice and engagement are front of mind in any solution.”
Jamie Jenkins, director of policy at Royal London, reiterated that there were “no concrete announcements on pensions or ISAs”, although there was a brief mention of both.
“In both cases, the focus will be on generating greater investment in the UK economy, and specifically growth sectors. We can expect more detail on this in the coming weeks.”
