Pensions 

ABI calls for independent pension commissioner

 

The government should bring in an independent retirement commissioner, the director of policy, long-term savings and protection at the Association of British Insurers has said.

Yvonne Braun called on the government to cease and desist from continual tinkering with pensions, and to bring in something akin to what New Zealand has, in the form of a retirement commissioner or an independent commission. 

Ms Braun said: "This is important... to have an independent, arms'-length body to help government analyse different options and provide research and analysis."

She also said the government must leave pensions alone to give consumers and the industry time to embed all the current changes.

"There is broad agreement that we need a period of stability, for consumers, first and foremost. We would like to see a pause in tinkering in isolation - such as we have already seen with the money purchase annual allowance - and time for things to bed in."

Last year, chancellor Philip Hammond announced he would reduce the £10,000 money purchase annual allowance (MPAA) to £4,000; a move which was then delayed ahead of the announcement of the 2017 general election.

Ms Braun also commented that to help more Brits save for retirement, the government might consider how to replicate a form of auto-enrolment for the millions of people who are not in employment.

"We also need to look again at banded earnings under the minimum threshold", she added. "Do we really need to stick to the £10,000 threshold? Do we really need to limit what pension contributions are paid onto this band of earnings? There is room for us to look at this.

"Also, in the medium term we need to get to more than an 8 per cent contribution rate. It is not enough. Australia is now at 12 per cent and we should look to getting towards that."

When it comes to opportunities and challenges post pension freedoms, Ms Braun commented that many decisions made by people since pension freedoms have been sensible.

She told FTAdviser that money has been going into flexible income products or guaranteed products when it came to higher pots, but warned also that tax revenues have been greater than initially forecast.

She said: "Obviously people are taking cash more quickly than we had anticipated and this is perhaps a warning sign to keep an eye on.

"We need to understand what people are doing and how this relates to their overall pension saving. We need to get to a place where people save more."

The ABI's Long-Term Savings Conference will be held in London on 4 July. For more details click here.

simoney.kyriakou@ft.com

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