The Government's deregulatory review of pensions must deliver "meaningful reform" rather than "simply tinker around at the edges", says Joanne Segars.
Speaking at the National Association of Pension Funds’ (NAPF) annual conference, Segars, the chief executive, outlined three key pension challenges for Gordon Brown as he prepares to take over as Prime Minister.
She says the costs of providing pensions has almost doubled, which is due in large part to increasing regulation, so a key priority for the government is to tackle cost by tackling regulation.
Segars adds: “The Government has to get to grips with its ‘back catalogue’ of regulations. The Deregulatory Review must not simply tinker around at the edges or it will have failed. Instead it must deliver meaningful reform that helps sponsors to balance costs while also meeting members’ needs.”
In addition, she says Brown’s Government “must send a signal that it is serious about maintaining and supporting occupational pension schemes”, particularly in the run up to the introduction of auto-enrolment in 2012, when existing schemes’ costs will increase by around £2bn.
“This must not just be warm words, welcome though they will be. It must be a serious signal like our proposed Good Pensions Fiscal Incentive which would reward employers for maintaining good provision post-2012,” says Segars.
She adds the focus so far has been on helping small employers contributing for the first time, but she says there is no guarantee that today’s hard-pressed scheme sponsors will continue contributing at present high rates.
Thirdly she warns the Government and the pensions industry must work together to ensure people have a better understanding of the need to save for old age and the risks of not doing so.
“We need to find a way of ensuring people can easily see if a scheme is on offer and if it meets certain standards. The NAPF Good Pension Quality Mark which we proposed last summer would do just that,” says Segars.
She points out the Government has signalled support for this NAPF initiative and says the body will be consulting with consumer, employer and employee representatives as well as pension providers as it works on the detail.
Segars adds: “We believe this will make a real difference to workers’ appreciation of their pension. We have moved into a world where there is a continuing need for workplace schemes. They will be different from the schemes that exist today but will still have employer support of one kind or another.”
“How successful they will be will depend on how the Government implements policy changes over the coming months.”
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