Labour reveals ‘better’ pension strategy

Labour reveals ‘better’ pension strategy

The government needs a better long term pension strategy, the shadow pensions minister has claimed.

Speaking ahead of chancellor's Philip Hammond's first Autumn Statement, Alex Cunningham, Labour MP for Stockton, said too many people in Britain were not aware of the importance of long term pension saving, and even if they were saving, there were significant problems.

Mr Cunningham, who was the keynote speaker at the Association of Professional Financial Advisers' annual dinner last night (22 November), said he was "proud and fond" of his own IFA and trusted the advice he has been given about his own pension funds.

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However, he said there were three main pension issues the government had not addressed properly and these had to be dealt with to provide people with a better pensions deal.

The issues, according to Mr Cunningham, are:

* Working out what is the next step for automatic enrolment.

* Considering how to raise contribution levels in pensions.

* Creating a long-term strategy that works for all.

Mr Cunningham said, when it comes to automatic enrolment, "People need simplicity. Investors and members just what to know what they are invested in. What are their options? 

"They need transparency on how much various fund choices cost. The whole pensions industry needs scale. There are too many small pots in existence in the UK. And there has to be good governance of workplace pension schemes."

The minister, who has been in the job for approximately five weeks after Labour leader Jeremy Corbyn appointed him, suggested the pension scheme member should have a "greater say" in governance.

He said: "In defined contribution (DC) pensions the risk is with the member so the member should have a greater say in scheme governance."

However, Neil Liversidge, principal of West Riding Personal Financial Solutions, said: "Members are not interested in getting involved. With my clients in mind, most just haven't got the time to get that involved with pension scheme governance."

Mr Cunningham said the Pensions Bill is a move to improving simplicity, transparency, scale and governance, but more needed to be done. 

He pointed to Monday’s (21 November) House of Lords debate on the Pensions Bill amendments as a case in point of things that needed to be improved.

Costs also need to be addressed across the gamut of pensions if people are to raise contribution levels and trust the industry, Mr Cunningham said. 

He explained: "How to increase contributions into pensions? First we must have cost transparency across the whole gamut. Transaction costs, investment costs, management costs - all these need to be addressed.

"It is clear a reduction in costs must lead to overall improvements in performance over a lifetime. It puts people's money back into the pot. Nobody wants to rob the industry of its rightful remuneration but we must encourage people to save."