Alan Pickering, tasked with heading the review into pensions simplification, today said that increas...
Alan Pickering, tasked with heading the review into pensions simplification, today said that increased distribution of pensions products through workplaces could be one of the results of the "three balances and three themes" being pursued in the development of a new pensions infrastructure that will stand the test of time, including political and demographic changes.
Speaking at the TUC Prospect for Pensions conference in London, he said there was no reason workplaces could not become a "pivotal conduit" for distributing products following recommendations on how to introduce balance into the marketplace between allowing product providers the "freedom to innovate" and the need to protect consumers from the "information asymmetry" that implies they can never know as much as providers.
As an example, he cited the Netherlands, where fewer rules mean there is a higher takeup of workplace pensions as providers were more able to "design what you want, what you need".
Pickering's other balances involve making sure that any pension offered suits both the employer and employee, including giving employers the flexibility on the issue of contributions, and ensuring there is a balance between those inside the "pensions fortress" and those left outside.
On that last point, he added that it would be vital to ensure that impediments were reduced for those on the outside looking to get in, i.e., to get a pension.
Pickering also picked up on three themes; proportionate legislation, equality between products (a "pension is a pension is a pension") and reducing the prescriptive element of the current system that is discouraging earners from saving more.
On legislation, he said the current regulatory regime was so complicated it had created a "checklist that squeezes out the brain" of those who were supposed to be thinking about problems.
Instead, he would rather see a regulator "with a brain, teeth and a nose" for sniffing out trouble.
And he added that it made sense to seek to hand back regulatory power to professional bodies, to make them help clients meet challenges beyond ticking off a checklist.
On the theme of making sure a "pension is a pension is a pension", Pickering said consumers wanted to see value for money irrespective of how their pension was delivered.
And that should mean no differences in benefits, regardless of whether a pension was obtained through the workplace or in the marketplace.
Finally, he said current rules were often a turnoff to employers and employees alike, and reducing the prescriptive nature of the current system in favour of making it easier should encourage more people to save more money.
Pickering would not specify when his review would be released, but it is expected sometime in the next month, along with the Sandler Review into the quality and cost of financial advice.
The joint Inland Revenue/Treasury review of the tax regime affecting pensions is expected by early Autumn.
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