15 November 2024
Commenting following the UK Chancellor Rachel Reeves’ Mansion House Speech in the City of London last night, Debbie Webb, Pensions Board Chair, Institute and Faculty of Actuaries, said:
“The IFoA is supportive of the Chancellor’s efforts to stimulate more growth in the UK economy and improve Defined Contribution (DC) and Local Government Pensions Scheme (LGPS) outcomes. This includes efforts to explore consolidation among DC schemes by establishing local government megafunds of greater scale and to increase consolidation of DC schemes more generally.
“As the pensions minister recognises, the foremost purpose of these assets is and will always be to provide security in retirement. We agree. It’s understandable that the Government has a say in how defined benefit assets to local government workers are invested. However, when it comes to defined contribution savers, their needs should be the driving factor in investment decisions. This means balancing the need for sufficient investment in growth assets with the associated risks and costs. Too much consolidation could have downsides too – more systemic risk and insufficient competition between providers to drive further innovation and improve efficiencies. Size is itself only a rough proxy for quality of DC schemes, and it is quality which will ensure the best outcomes for pension savers.
“The investment review that the Government has just concluded is only one part of a much larger collective effort to modernise the UK pensions system. Improving investment outcomes for DC savers is important, but that alone will not solve the pensions adequacy problem. There are important industry discussions around extensions to automatic enrolment, collective pension schemes and innovative scheme designs that hold the key to ensuring retirement security for pension savers.”
~ENDS~
Hannah Patmore, Communications Manager, IFoA
Tel: 07519106714
Email: hannah.patmore@actuaries.org.uk
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