In a report published today (10 March), MPs said that the potential increased risk to pension savers from fraud and mis-selling, following the introduction of the new pension flexibilities from April, strengthens the case for a single pensions regulator.
At present, responsibility for pension regulation is currently shared between the Financial Conduct Authority and The Pensions Regulator.
Dame Anne Begg MP, chair of the Work and Pensions Committee, said that the reforms give savers the freedom to use their money in they way they choose and have the potential to make retirement saving really attractive.
However, she added that savers need to be properly protected from being ripped off or suffering financial loss from making the wrong decision about how to use their pension pots.
“What savers really need is a strong, single regulator to act in their interests; we are not convinced that the FCA is sufficiently focused on pensions,” stated Ms Begg.
“The comment made in evidence to us that it can’t ‘stop fools acting like fools’ does not inspire confidence in the FCA’s willingness to be proactive in protecting savers.
She commented that the government is coming round to the need for a single regulator. “We believe that the big shift to the new pension flexibilities in April means that it is now time to make this change, which we originally recommended back in 2013.”
The report identified a range of issues that the Work and Pensions Committee said would be best addressed by establishing a new independent pension commission, along the lines of the 2005-2006 Pensions [Turner] Commission.
It noted that this would be able to take the same evidence-based and inclusive approach to assessing the impacts of the recent pension reforms and recommend further improvements where necessary.
Yvonne Braun, director of long term savings policy at the Association of British Insurers, added that an independent body, “such as an Office for Intergenerational Responsibility or a Retirement Commission” could have an “important role” to play in shaping public policy.
She pointed out that it could also help inform a national long-term savings strategy to bring together the diverse departments and regulators with responsibility for different aspects of savings and retirement.
“This independent body should investigate the idea of a single pension regulator which would bring much needed consistency between trust-based and contract-based schemes,” she added.
Last month, a report by the International Longevity Centre-UK said a new pensions commission was urgently needed in order to look at the problem of retirement income adequacy in a holistic way – taking into account the political and economic realities of our time.
Last year, Royal London also called for a new independent commission to set the direction of policy on pensions, retirement income and later life financial provision, amid concerns that short-term government thinking could see some of the radical pensions freedom unwound.
ruth.gillbe@ft.com
