Government urged to rethink lifetime provider proposals
The Society of Pension Professionals (SPP) has joined other trade bodies in urging the government to think again on its proposals for lifetime provider pension pots.
Under the proposals, savers would have a single pension scheme throughout their lives irrespective of how many jobs they may have had.
The model has been suggested by the government as a way to help solve the problem of multiple small pension pots being held by savers.
But the proposals are “complex and costly”, the SPP warned. It said that alternatives such as the Government’s pensions dashboards project could more effectively solve the small pension pots problem.
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The SPP today published an analysis of the government plans in a paper called “Just one pension?” which acknowledged there could be some benefits from a lifetime provider model but “the conclusion is that such an approach would be complex and costly.”
The paper pointed out that the government has already set in motion several positive pensions policy reforms that should be given an opportunity to be implemented and assessed before considering whether the LPM is needed.
It said there are probably better, cheaper, more effective alternatives, most notably a fully operational pensions dashboard system that comes into effect in 2026 and could be further enhanced in the future. It said that if policymakers and the industry concentrate on the policy changes already in motion, this is likely to increase their chances of success while simultaneously reducing the chances of a LPM being required.
Steve Hitchiner, president of the SPP, said: “SPP’s latest discussion paper has set out a number of sizeable challenges and downsides to a lifetime provider model. In our view, there are more effective alternatives, most notably a fully operational pensions dashboard system, that would be a far better use of resources.”
The provider trade body said the proposals could fundamentally alter the role of the employer and damage outcomes for savers and also pushed the case for pension dashboards to be allowed to be bedded in before more reform.
Yvonne Braun, director of long-term savings policy at the ABI, said: “Pensions dashboards will bring key improvements in data quality which could help to make more efficient, cheaper pension transfers a universal reality. It is important that this work is completed, and the impact understood, before any further reforms are added to the mix.”