Any incoming government must commit to the timely completion of existing pension initiatives where there has been broad cross-party support, the Association of Consulting Actuaries (ACA) has said.

In its Pensions and Savings Manifesto, the ACA called for the stability of long-term pension policy so that savers, employers, and scheme managers have “greater” certainty to develop and implement “sensible” long-term plans.

This includes launching pensions dashboards, completing value for money initiatives, further changes to auto-enrolment (AE), and finalising the new defined benefit (DB) funding regime, including The Pension Regulator’s final code.

The ACA said that it also the Department for Work and Pensions (DWP) initiatives to encourage and enable a greater use of current and future DB surplus funds to support employers and pension scheme members.

ACA chair, Steven Taylor, said: “While each of these areas appears to enjoy cross party support, they have so far not translated into firm outcomes for savers and have instead been beset by continued delays and confusion of priorities.

“Each party should commit to completing this list of policy priorities. Otherwise, we risk a lost decade of negligible progress since the introduction of AE.”

In addition to the existing work already underway, the ACA called for further expansion of AE, calling specifically for an increase in minimum contribution rates and further widening coverage, to include the self-employed and those engaged in the ‘gig economy’.

 “According to DWP research, 12.5m people are undersaving for retirement. Without action, this means that almost half of the UK working age population are on course for financial disappointment in retirement or may end up working for far longer than they currently expect,” Taylor stated.

“AE, whilst a success in terms of restoring and extending coverage, will not provide the level of income most savers expect."

Given this, Taylor argued that the AE minimum will need to be either materially stepped up or combined with other measures, including voluntary ‘sidecars’, which combine a pension pot and liquid account to manage the flow of money in a smarter way.

Indeed, the ACA argued that sidecar savings could encourage an increase in voluntary savings above the AE limits, noting that research by Nest in 2021 had indicated that sidecar savings can be very effective for groups that have previously not had money put aside.

"We also agree with their anecdotal findings of a further positive link between voluntary savings and financial wellbeing and resilience,” Taylor stated.

The ACA also encouraged the government to apply learnings from the AE process so far in other areas, calling for the establishment of a default collective defined contribution (CDC) provider similar to how NEST currently operates for DC savers, to guide individual decumulation pathways for DC savers.

The ACA also advocated for a better social care regime and state pension sustainability with a replacement of the triple lock in its report. 

In addition to this, it encouraged any incoming government to avoid making “knee-jerk changes” to the current pension tax regime as pension decisions are long term and stability is “essential”.

Taylor stated: “Any revised or updated tax regime should cater for all savers (DB, DC, and CDC) and changes should not lead to any groups being discouraged from continuing in employment due to arcane rules.”

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