Industry experts have warned against the government’s proposed lifetime provider model, with a report from the Society of Pension Professionals (SPP) arguing that there are more effective alternatives already underway that would be a better use of resources.

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 2023 Autumn Statement, which also looked at whether a lifetime provider model would improve member outcomes.

And, despite growing concern from the industry, the Chancellor then confirmed that the government would continue to "explore" plans for a lifetime provider pension model at his 2024 Spring Budget.

However, the SPP argued that while there may be some benefits from a lifetime provider model, alternatives such as the pension dashboards project could more effectively solve the small pension pots problem.

The report, Just one pensions, said 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 lifetime provider model is needed.

It also argued that, if a lifetime provider model is introduced, a robust, proactive regulatory regime will be critical to its success, with particular consideration needed as to whether the regulators have the right powers.

In addition to this, the SPP warned that introducing an effective lifetime provider model will take many years, suggesting that it is unlikely to be up and running with the next decade.

This means the lifetime would not provide any benefit for those who are less than 10 years away from retirement.

The report also emphasised the "costly and complex" administrative work involved, arguing that, although not insurmountable, it will be a “sizeable” challenge for employers to direct contributions to a number of different providers.

Commenting on the report, SPP president, Steve Hitchiner, said: “The SPP’s latest discussion paper has clearly 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.

"As well as making any requirement for a lifetime provider model largely redundant, concentrating on other pensions policies that are already in motion increases the chances of those policies succeeding; a genuine win-win solution.”

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