Further concerns have been raised over the Department for Work and Pensions’ (DWP) pot for life proposals, with a number of industry organisations calling on the government to instead focus on existing projects, such as dashboards and auto-enrolment reform.

The Chancellor, Jeremy Hunt, previously launched a call for evidence on plans to offer employees a choice on their workplace pension provider as part of his Autumn Statement, which also looked at whether a lifetime provider model would improve member outcomes.

However, the Association of Consulting Actuaries' (ACA) response raised “serious doubts” about both the timing and desirability of the proposals.

In particular, the ACA warned that the new infrastructure required across multiple areas will be significant, raising concerns that this could provide a distraction given the range of other important initiatives in flight.

In addition to this, the ACA argued that while engagement levels could increase when savings pots are larger, there are concerns that people may select based on familiarity or using a purely price or short-term performance lens, without thinking more holistically about future outcomes.

It also suggested that a move away from employer sponsored arrangements could reduce employers’ engagement with retirement saving, and result in competition issues if regulators do not ensure otherwise.

ACA DC Committee chair, Tessa Page, stated: “There is a risk that “pot for life” prompts employers to view workplace pensions as less important, whilst also bringing a new set of risks around mis-selling and scams.

“We recognise a need to test the status quo of the workplace pensions framework but given the sheer number of initiatives in flight it feels that policy priorities should lie elsewhere.”

These concerns were echoed by Isio partner, Richard Birkin, who said that while a ‘pot for life’ system has many attractions and could help address some of the challenges facing the industry, there are a raft of government initiatives already in progress which should be given time to bed in before further reforms are contemplated.

"From the small pension pots solution to pensions dashboards and from innovation in the decumulation phase to ensuring pension scheme managers are testing that their schemes give value for money – there is plenty of focus on improving member experience and outcomes," he stated.

"We’d rather that the government sees the current set of policies to fruition first before thinking about introducing the next set of reforms.”

Both the Society of Pension Professionals and LCP also previously warned that the pot for life plans could prove a distraction to other pressing iniatives, agreeing that the government should prioritise the work already in progress.

Despite these industry concerns though, TPT Retirement Solutions DC director, Philip Smith, argued that the lifetime provider reforms could be a “game-changer” in improving retirement outcomes for DC pension savers.

Smith acknowledged that creating a lifetime provider system would be a huge operational challenge for schemes and employers, requiring a significant overhaul of the current pension system to create a clearing house to handle the increased administrative burden.

However, he argued that “ultimately the lifetime provide reforms should provide better outcomes for members”.

“The changes could provide members with a better opportunity to understand the benefits accumulated through their DC pension pot and thereby give them greater control,” he continued.

“Members would find it easier to engage with their pensions, make investment decisions, and monitor how much they have saved for retirement. In turn, this could encourage people to increase their pension contributions, so they are better prepared for retirement.”

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