The pensions industry has welcomed the government’s plans for a ‘landmark’ pensions review, with some suggesting that the review could give scope for the potential for faster implementation of ‘pro-growth’ reforms to pensions.

Chancellor, Rachel Reeves, recently announced the launch of a “landmark” review of the pensions landscape, which will consider further steps to improve pension outcomes, including assessing retirement adequacy, and increase investment in UK markets.

The launch was welcomed by The Pensions Regulator, with chief executive, Nausicaa Delfas, stating: “There are more than 20 million workplace pension savers and each one deserves the best possible retirement.

“Pension investment in a diverse range of assets has the potential to improve savers’ outcomes and support economic growth.”

The pace of the review has also been highlighted, as Aviva director of workplace savings and retirement, Emma Douglas, welcomed the government’s determination to undertake a pensions review as an early priority.

“We fully support government’s ambition to get pension funds invested in a way that both supports UK growth and improves outcomes for savers,” she stated. “We see this as an important next step and look forward to working with government and industry on the review.”

Hymans Robertson also praised the speed with which the government announced the review, with head of pensions policy innovation, Calum Cooper, highlighting the initial focus on investments as a “sound place to start”, placing the emphasis more on what we have and where political capital can be built, not spent.

“This is about pace, momentum and confidence in areas that do not cost money," he stated. "In practice, to support this the pensions industry needs a practical road map and attractive opportunities."

Adding to this, People’s Partnership chief executive, Patrick Heath-Lay, said: "We welcome the government's announcement of its promised pensions review, and very much look forward to contributing to it over the coming months."

LCP partner, Steve Webb, also suggested that the new details on the review could suggest the potential for faster implementation of ‘pro-growth’ reforms to pensions.

Webb pointed out that whilst it seemed that the that the Pension Scheme Bill included in the King’s Speech would include a “narrow” range of measures, should the review find that further measures could be introduced to ‘drive investment’, these could also be included in this Pension Schemes Bill rather than waiting at least 12 months for another bill in another King’s Speech.

In particular, Webb said that measures around the use of the Pension Protection Fund as a ‘public sector consolidator’ could receive a particular focus, as a means to bring together potentially thousands of smaller defined benefit (DB) schemes and others deemed unattractive to the private insurance market.

He also suggested that there could be further consideration around the potential to encourage DB pension schemes to ‘run on’ rather than move to immediate de-risking with an insurer, including measures to allow sponsors to extract surplus from the best funded schemes.

Indeed, Webb suggested that this idea could have multiple attractions to the government, including slowing the sale of gilts, sustaining productive investment for longer and generating surplus cash to benefit corporate sponsors, DB members and potentially the DC generation.

Webb stated: “By operating a two-stage pensions review, with an early hunt for measures which could be added in to the current bill, the government has the potential for faster implementation of measures which it believes would promote the ‘productive’ use of pension scheme finances.

"As a result, we are likely to see significant legislative changes across the pensions landscape in the next 12 months.”

And with such scope for further change, industry organisations have been quick to share their broader pensions review ‘wish lists.

Smart Pension, for instance, outlined a number of “urgent” policy recommendations designed to address weaknesses in the current pensions environment that are negatively impacting savers right now.

In particular, the group urged the government to lower the qualifying age for auto enrolment (AE) from 22 to 18, and removing the lower earnings limit so that contributions are made from the first pound earned.

It also encouraged the government to push ahead with the launch of the pensions dashboards, and outline a “clear timetable” for increasing minimum contribution rates to 12 per cent.

Indeed, Standard Life retirement savings director, Mike Ambery, argued that raising minimum auto-enrolment contributions remains “the single biggest lever we can pull to improve outcomes”, expressing hope that we could see movement on this following the review.”

Cooper agreed, pointing out that there is a “big intergenerational gap” between those with adequate defined benefit (DB) pensions and younger generations on course for inadequate DC pensions incomes.

“Whilst AE has been a huge success in getting the employed saving for later life, the level and breadth of saving is not enough and there is so much more to be done,” he continued.

“There’s also a gender pension gap to be closed; how do we improve the fact that men expect more than 25 per cent higher pensions than women?

“We still believe that independent pension review and cross-party consensus would be the best way to solve these knottier problems and help ensure the tough choices are made that last a generation.”

This was echoed by Luthi, who suggested that second stage of the review should include "collaborative development" of a roadmap for the future of AE; a strategic approach to policy development on wider specific policy issues (including small pots, decumulation, and value for money); and a number of key safeguards to help steer policy development and delivery.

In addition to this, Association of Member Nominated Trustees (AMNT) co-chair, Maggie Rodger, called on the government to include discussions around the ways collective defined contribution (CDC) can deliver better returns for members than DC as a "significant" part of its review.

“We look forward to continuing our engagement with DWP and roundtables in collaboration with the pensions industry and will continue to advocate for good retirement outcomes for all workers,” she stated. “Discussion is good but delivery is key”.

In order to support long-term policy decision-making over “eye-catching but short-termist changes”, Smart also called for the establishment of a new and independent Pensions and Savings Commission, to help formulate a long-term national savings strategy with cross-party support, and ensure that all UK savers have enough money to live comfortably when they reach retirement.

Smart Pension senior director of strategic delivery, Eve Read, said: “We would welcome consideration around the expansion of auto enrolment and increases to contribution rates.

"As detailed in our new report, measures like these are absolutely essential to ensure better outcomes and financial security for people in retirement.”

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