A cross-party commission should be established to support political alignment around pensions policy and deliver long-term planning stability, according to Hymans Robertson.

The consultancy argued that short-term Treasury priorities should not dictate pension policy, especially if there is a General Election in the next 12 months, as expected.

Adequacy remained a “massive issue” for defined contribution (DC) scheme members, Hymans Roberston head of DC markets, Paul Waters, said.

“The auto-enrolment minimum is currently not enough for good long-term outcomes and needs to be raised to 12 per cent,” he continued.

“Time is running out for those with DC pensions and inadequate contributions to gain a good retirement income. So, there must be legislation to allow pension schemes to default members into post-retirement options to give them a genuine whole-of-life pension solution.

“Innovative retirement solutions exist that could deliver better outcomes, but a default approach would enable these to flourish and the government must encourage this.”

Hymans Robertson partner, Calum Cooper, added that a key objective of the proposed commission would be to stimulate diverse retirement saving solutions that improve retirement outcomes whilst supporting wider economic growth.

He also highlighted potential changes to tax policy around pensions, such as not applying tax on refunds that are re-invested in UK productive finance or climate transition initiatives, to align defined benefit (DB) scheme choices with wider aims around growth, climate and pensioner living standards.

“The statutory objectives given to the Pensions Regulator (TPR) should be reformed and re-oriented in 2024,” Cooper added.

“A better statutory objective for today would be to balance keeping past benefits secure with offering quality pensions to current workers.

“This TPR mandate would give employers, and the pension industry, freedom to develop a new generation of retirement saving designs that would allow longer-term investment horizons and secure better employee outcomes. The new funding code will not touch the edges here.”

Finally, Cooper emphasised the need for innovation in data and operations, stating that while the journey to solvency funding was at its end for many, getting data and benefit specs buyout ready and staying there will be “key”.

“There is huge scope for innovation and embracing AI to enhance human efforts here, which are a scarcity,” he concluded.

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