Following an 'avalanche' of consultations last year, industry experts have argued that action is needed in 2024, although there are concerns that an impending general election could result in delays on a number of key initiatives.

Asked what would be the biggest challenge for the pensions industry in 2024 as part of the Pensions Age monthly opinion question, a number of industry organisations raised concerns that, despite numerous recent consultations on plans for change, there has been little progress in terms of implementation.

Indeed, Natixis IM head of UK DC strategy and sales, Nick Groom, argued that despite consultations coming "thick and fast", the evolution is taking “far too long, and many of us will have already retired before we benefit from these changes”.

Adding to this, Dalriada Trustees managing director, Chris Roberts, also argued that “the biggest challenge for the industry is buying into change, with a history of poor execution”.

“We need to move past consultation and decide on the framework for future pensions, then get it implemented in timetables that do not move,” he emphasised.

“There is a huge opportunity to innovate and create governance solutions for small scheme consolidation and to reinvigorate defined benefit options and make the space attractive again.

“However, we cannot commit to change without that framework. It's time to stop talking about it and get it done.”

This sentiment was echoed by Northern Trust Europe, Middle East and Africa pensions and insurance executive, Mark Austin, who argued that 2024 will be the year when a lot of planning and preparation becomes decision and delivery, both in defined benefit (DB) and defined contribution (DC).

“So, the biggest challenge for the industry is for trustee boards in adapting, equipping and educating themselves to deliver on these changes in the best interests of members in what will probably be a defining year for a pension system undergoing fundamental transformation,” he stated.

However, Aegon head of pensions, Kate Smith, argued that much of the detail still has to be thought through, such as the value for money framework, default consolidators for small deferred pots, lifetime providers, retirement income ‘defaults’ in trust-based schemes and implementation of the 2017 auto-enrolment reforms.

She continued: “A key challenge will be ensuring there is 100 per cent policy and regulatory join-up between the Department for Work and Pensions (DWP), Financial Conduct Authority, and The Pensions Regulator so that, ideally, members’ journeys and expectations are no different regardless of whether they are saving in a trust or contract-based scheme, or both.

“The reality is that although a lot of the thinking will be carried out in 2024, it could be a few years until most, if not all, of the initiatives are delivered, and even longer before they make any impact on member outcomes."

There are also concerns that some of the new initiatives and policy proposals could limit progress on existing initatives, as Society for Pension Professionals (SPP) president, Steve Hitchiner, admitted that "these new ideas will inevitably soak up a lot of time for the industry and the DWP, making it harder to deliver what is already in the pipeline".

"For DC, it is still unclear when we will see the further regulations needed to extend auto-enrolment, or the regulations needed to establish collective DC (CDC) schemes," he continued.

"Delivering these existing initiatives could lead to improved outcomes for members, but instead the focus is on the government’s call for evidence on a ‘lifetime provider model’, and the start of the year will be dominated by much of the industry highlighting their concerns with these proposals.

However, these broader policy proposals could be in jeopardy given the current political landscape, as Zedra Governance client director, Sam Burden, argues “you don’t have to be a political pundit to predict a strong chance that 2024 may bring a change in government to Labour”.

“Should this happen, we have been ‘promised’ by Shadow Chancellor of the Exchequer, Rachel Reeves, they will “review the entire pensions landscape to ensure it delivered “full potential” for savers and companies”,” she continued.

“An ambitious declaration indeed… and that review could take some time.”

These concerns were shared by PensionBee director of public affairs, Becky O’Connor, who argued that an impending general election will “doubtless” be the biggest challenge for the industry in the year ahead.

She continued: “Political upheaval and a temporary halt to decision-making at some point during the year could slow down progress in some key areas, such as the extension of automatic enrolment, pensions dashboards (again), Mansion House reforms and now new ‘pot for life’ proposals.

“The complete removal of the lifetime allowance in April has already taken up a huge amount of headspace within the industry. The possibility of its reintroduction should Labour get in to power might continue to create uncertainty.”

However, People’s Partnership director of policy, Phil Brown, argued that while it remains to be seen whether many of the proposed reforms will be implemented before the next general election, there is still plenty for pension providers to put into place and prepare for in 2024.

“The conversation around the Mansion House Reforms and whether or not the asset management industry can provide the quality, affordable investment products needed to make this work will continue throughout the year,” he stated.

“We expect to see movement on the value for money proposals, which are central to so many other proposed pension reforms, including Mansion House.

“We are also getting that bit closer to pensions dashboards – which could be one of the most significant of all industry innovations – to becoming a reality and is already a priority for many providers.”

Read more about what to expect from the pensions sector in 2024 in the Pensions Age magazine here.

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