Pension professionals have called on Labour to implement « significant advancements » in relation to pension policies, to help overcome the « persistent barriers » experienced by members of the British public.
In the wake of Labour’s resounding electoral success, experts within the pension sector are recommending that this newfound sway be put towards significant changes in areas such as pension and retirement policies.
These reforms could range from alterations to automatic enrolment protocol right through to tackling the increasing problem of lost pension pots across the country.
Becky O’Connor, director of public affairs at PensionBee, recognised a desire for substantial changes but suggested that the new administration should focus on a handful of key issues.
She praised Labour’s general intent to carry out a broad analysis regarding the pension and retirement savings system.
She said that the review had the potential to bring « a real benefit to millions of pension savers » but also emphasised the need to « promptly » address the slow transfer times of pensions as they form a « persistent barrier to pension engagement ».
She also drew attention to £50 billion potentially languishing unused within old pension pots. She urged the Labour Party to « address the ‘pot for life’ solution » and warned: « Immediate action is essential for better retirement outcomes for consumers. »
Lost pension pots are a common issue when individuals switch jobs and forget to transfer their pensions, often leaving behind pots so small they can’t even cover administrative costs. A ‘pot for life’ solution would mean employees remain in the first pension scheme they started saving into at the start of their careers, unless they choose to move.
A significant change being advocated by pension experts relates to automatic enrolment (AE), a system that ensures employers automatically enrol employees into a pension plan if they meet certain criteria. At present, workers qualify for AE from the age of 22 until state pension age if their pre-tax earnings are at least £10,000.
Becky is urging Labour to reduce both the earnings requirement and lower the enrolment age to 18. She explained: « Early contributions are invaluable due to the benefits of compounding growth, and such measures will significantly strengthen the future financial security of the UK workforce. »
Finally, she appealed to the new government to provide detailed insights on the Mansion House Reforms, implemented by former chancellor Jeremy Hunt last year. Specifically, she asked: « How the Mansion House reforms will align with the UK’s economic growth strategies while ensuring favourable returns for pension savers. »
« Clarification is needed on how exposure to UK growth opportunities will be tailored to the proximity of savers to retirement, particularly as older savers tend to invest in lower-risk assets to safeguard against market volatility and potential downturns. »
