Pensions minister targets growth, better retirement outcomes – Law & Regulation

Reynolds gave the opening address at the Pension and Lifetime Savings Association (PLSA) annual conference in Liverpool today (15 October).

The minister said the reforms set to be contained in the bill “could boost the pension pots of over 15 million savers” through small pot consolidation, the introduction of a Value for Money framework and by compelling defined contribution (DC) pension schemes to offer products to members at the point of retirement. 

“We will protect members from the risk that multiple deferred pots present,” said Reynolds. “This reform will improve value for savers, remove costs from the system and also support investment opportunities.” 

Meanwhile, the Value for Money framework will “drive up standards and drive greater consolidation across the industry”, she continued, as well as contributing to economic growth and pension pots “by promoting an increased focus on assets that could deliver long-term value”. 

The requirement to offer members products at retirement would help consumers navigate the “very difficult decisions about what to do with their savings”, Reynolds added. 

She said that default solutions would “mean more funds are invested for longer, with the potential for greater investment in growth assets and better outcomes for savers”. 

Corporate DB ‘not forgotten’ 

The minister was keen to reassure delegates that, despite the focus on defined contribution and public sector pensions in the first phase of the Pensions Review, the government had not forgotten about defined benefit (DB) schemes. 

She said the government was still considering the results of consultations carried out by the previous administration, including on consolidation. Reynolds hinted that this could be addressed during the “interim stage” of the first phase of the Pensions Review. 

The minister highlighted the importance of commercial consolidators of DB schemes – dubbed “superfunds” – that could improve outcomes for members who are at risk if an employer becomes insolvent. 

“Superfunds can make a real difference for members,” said Reynolds, “enabling them to remain in an ongoing DB pension scheme, while their employers can focus on growing their core businesses and driving growth overall.” 

Meanwhile, she also emphasised the importance of the collective DC model in the wake of Royal Mail launching its new scheme last week. Reynolds said CDC would receive strong support from the government. 

“There is much more we can – and are – doing alongside this to deliver better value for money for future pensioners and unlock huge investment potential,” added Reynolds.

Further reading

Government launches National Wealth Fund to drive pension fund investment (15 October 2024)