On the go: More than three-quarters of employers have said they think their pension scheme trustees will weigh up resigning their positions in response to the mountain of regulations they are expected to comply with.
The pensions industry has been kept busy in 2022 with new government consultations and regulatory guidance.
These have recently included a fresh consultation on scheme investment in illiquid assets, which was published on March 30, while earlier in March pensions minister Guy Opperman called on the industry to work with the governmenton expanding the collective defined contribution market.
There is growing enthusiasm for CDC, according to research by the Association of Consulting Actuaries.
Fifty-eight per cent of employers support CDC being made available — a rise of six percentage points from last year — while 54 per cent are behind its extension to allow for the creation of industry-wide and multi-employer CDC schemes. This was up from a support level of 46 per cent last year.
Trustees are, however, apparently growing weary of the pace of regulation heading their way.
The ACA said 7 per cent of schemes have moved to sole trusteeship governance over the past two years, which the body said evidences “the negative impact of the growing regulatory burden”.
While highlighting the tide of reform and its impact on trustees, the ACA nevertheless called upon the government to reform auto-enrolment in order to address pension inequities, with a particular focus on women, minority groups and the underprivileged.
The number of employers seeing auto-enrolment cessation rates materially increase doubled to 20 per cent from 10 per cent as a result of the coronavirus pandemic, the ACA said.
“The government’s inaction in this policy area is particularly concerning,” said ACA chair Patrick Bloomfield.
“We are seeing millions of workers in DC schemes ‘sleep walking’ towards levels of income in retirement in the years ahead that will fall far short of the incomes of millions of current pensioners who have benefitted from defined benefit arrangements.
“Without a plan for increasing saving levels, the younger generation of taxpayers of tomorrow will face enormous bills to support the elderly in retirement, dwarfing the extra funds recently allocated to social care.”
The ACA also called for a simplification of the pensions tax regime, with 89 per cent of its survey respondents saying the current system is too complicated and needs reform, even if changes leave some people worse off.
“The ludicrous complexity of pensions tax is also preventing Britons from saving,” Bloomfield said.
“It is time for a root and branch review, to get us saving for our futures. Again, no action has been taken.”
