Marvin OnumonuThe Association of British Insurers (ABI) has called on MPs to make sure savers are the priority as the Pension Schemes Bill goes before the Public Bill Committee.
The ABI noted broad support for the Bill, highlighting measures like allowing firms to merge pension schemes if it helps customers, bringing in a way to check if funds provide value for money, and tackling the issue of small pension pots.
These changes, along with reforms from the pensions commission, are seen as part of a longer-term plan to help people manage their pensions.
The ABI pointed out that the insurance and long-term savings industry supports the UK economy and growth, mentioning the Mansion House Accord signed by 17 major pension funds this spring.
Research found bulk and individual annuity providers had invested 65% of assets in the UK.
It was stressed that savers should always come first and that trustees and pension providers must be able to act in the best interests of savers.
The ABI said mandating how schemes invest would reduce trust in the system, and the Government should focus on making the UK attractive for investment.
Concerns were raised about Superfunds, which are designed to help schemes and employers manage defined benefit pension liabilities.
The ABI noted that Superfunds are less strictly regulated than insurance firms and hold less capital, putting pensions at greater risk.
The ABI called for strict rules for Superfunds, similar to those for insurers, and for the Gateway test to be kept in place.
It was pointed out that if schemes are allowed to take money out of surplus pension capital, the main priority must be keeping pension benefits safe.
The ABI said the interaction between surplus extraction and the Gateway test must be managed carefully to prevent schemes dropping below the buyout level.
Additionally, the ABI requested a clear timeline for how new measures will be brought in. It was noted that a “contractual override” should be in place before reforms on value for money and small pension pots, so savers can be moved to better schemes.
The ABI said firms need clear guidance on how changes will be rolled out so they can prepare in advance.
Furthermore, the ABI also noted that the Bill is about helping people.
It highlighted that current rules mean many automatically enrolled in workplace pensions miss out on useful information from providers, as they are opted out of marketing by default.
The ABI said the Bill could fix this by allowing workplace pension providers to send more information, helping people save more and make better decisions.
Rob Yuille, head of long-term savings policy at the ABI, said: “It’s an exciting time for pensions and there is much to celebrate in the government’s Pension Schemes Bill. But it does also need careful scrutiny.
“With the right approach, this Bill alongside the reformed Pensions Commission, adequacy review, and upcoming regulatory changes could fundamentally strengthen the UK’s pension system.
“We’ll continue to lead on behalf of the sector to ensure savers’ interests remain at the heart of reform.”
