The Future of Pensions Conference
Millions of workers are not saving enough to provide an adequate pension, Association of Consulting Actuaries’ 2015 pension trends survey warns. The HMRC Personal Pensions Statistics 2015 revealed that the average pension saving is just £30,000 in total, enough to provide an income of around £1,800 per year. The recent coalition government has made several changes to public and private pension provisions, with the aim of both improving provisions and ensuring that millions are not left destitute by bad planning. Reforms to public provisions have increased the real value of state pensions, ensuring that those who contribute throughout their working life are fairly rewarded. Similarly, changes have been made to private pensions, allowing individuals to have greater control of their private pension savings by enabling them to withdraw funds as a lump sum. There is, however, an element of controversy surrounding these new government reforms, which many feel will negatively impact pension provisions.
Join us for The Future of Pensions Conference, where high level speakers from government and industry will be presenting their views on pension reforms. Topics covered will include the changes to public and private pension provisions, such as state pension age, annuities and workplace pension enrolment.
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|Jeff Houston||Head of Pensions, Local Government Association|
|Chris Curry||Director of the Pensions Policy Institute|
|George Graham||CFO, Lancashire and London Pensions Partnership (LLPP)|
|Neil Duncan-Jordan||National Officer, National Pensioners Convention|
|Nigel Ferrier||Executive Chairman, Ferrier Pearce|
|Benjamin Kelly||Vice President, Blackrock Investment Institute|
|Stephen Bowles||Head of UK Institutional Defined Contributions, Schroders|
|Paul Sturgess||Director – Pension Administration and Strategy, Equiniti|
|Joseph Clease||Principal Economist, Department of Work and Pensions|
|Andrew Pennie||Marketing Director, Intelligent Pensions|
|Lesley Alexander||Managing Director, Ferrier Pearce|
Pension provisions have always been an important issue, as reflected in historic government reforms, from Thatcher’s 1980 Social Security Act to the coalition government’s 2014 Pensions Act. Under the coalition government, various pension reforms were introduced to both public state pension provisions and private provisions. In terms of state provisions, the coalition introduced a new ‘triple lock’ guarantee, which ensures that state pension is increased by whichever is higher – inflation, wages or 2.5%. David Cameron stated that this new system will make it easier to reward “People who have worked hard, who have done the right thing”. Since its introduction, the triple lock initiative has allowed basic state pension to rise by an unprecedented 5.2%.
Other changes, some more contentious than others, are being made to pensions by the government. The 2015 Queen’s Speech outlined plans to scale back tax relief on pensions. According to HMRC figures, the cost of tax relief on pension contributions is around £35 billion. By reducing spending on tax relief, the government plans to fund an expansion to free childcare, increasing the time provided for 3 and 4 year olds from 15 to 30 hours a week. According to the government, this initiative will cost £350 million and provide more care for 600,000 children each year by 2017. In addition to this, in April 2015 George Osborne announced that the age at which state pension can be claimed will rise to 66 for both men and women by 2020. For men this rise from the current age of 65 is incremental, but for millions of women in their late forties and early fifties this means that they will be retiring six years later than they expected. Written evidence submitted to the Work and Pensions Committee before its first session in March 2013 was dominated by the complaints of women born between April 6 and July 5, 1953, who will be adversely affected. Pensions expert Ros Altmann, says of the bill: “It is a manifest unfairness and I hope the government will put in place some transitional arrangements to remedy this injustice.” The government has defended their decision, however, stating that delaying the changes would place an unfair financial burden on younger generations. These changes to the state pension have also been supported by reforms to private pension provisions.
A variety of changes were made to private pension provisions by the coalition government, such as alterations to annuities and workplace pensions. Reforms have been made to the way employees are enrolled onto workplace pension schemes. The new system is called ‘automatic enrolment’ and is designed to ensure that all workers who are over 22 years old and earn above £10,000 are automatically included in the workplace pension scheme. This reform has proved difficult for employers, with Liesl Smith from the Federation of Small Businesses calling it “a real challenge” for small businesses who simply do not have the HR resources to implement the changes smoothly. Government concerns about this issue have been so great that the Department for Work and Pensions commissioned an £8.5 million advertising campaign to change employee and small business perceptions of auto-enrolment.
In addition to this, alterations to private pension annuities also came into effect in April 2015. This reform means that a person over 55 years of age no longer needs to purchase an annuity, but can instead gain full access to their pension pot. Most people will be able to access 25% of their pension pot without paying tax and larger withdrawals will be treated as income in terms of tax for those over 55. These changes allow people greater freedom to invest their pension savings as they wish. As well as annuity investment, there is now the option to fully or gradually withdraw funds or invest in the stock market. Some are concerned, however, that these changes will encourage people to invest their pensions unwisely. Labour's shadow chancellor Ed Balls said that scrapping the requirement to take out an annuity altogether was a potentially "reckless and irresponsible" move. For most people, an annuity is still the safest way to ensure a reliable income for the entirety of their remaining years. It insures against them living beyond the capacity of their funds and, if a good deal is secured, can increase their pension savings by up to 40%. The Financial Conduct Authority has warned that government changes may discourage people from taking advantage of these benefits in favour of more risky investments that promise higher returns.
In spite of concerns and opposition, government activity in pension reforms looks set to continue. When announcing the 2015 Summer Budget, George Osborne has said that he is “open to radical reform” in the pensions system and new legislation seems to be in the pipeline. In July 2015, for example, the all-Conservative government published a green paper to discuss the intention of reforming pensions to be more like ISAs. Former Pensions Minister Steve Webb warns that “Pension Isas would be a huge risk with uncertain consequences, and once implemented, it would be hard to reverse.” He suggests that pension taxes discourage people from blowing their entire pensions and removing these could lead to potential disaster for individuals. With opposition to recent reforms and concerns surrounding proposed reforms, the future of pension provisions looks uncertain.
Delegates attending The Future of Pensions Conference will learn about the arguments surrounding the recent reforms to public and private pensions, as well as the way that these reforms will affect current and future pensions and the way that they can access their provisions.
Registration, Refreshments and Exhibition
Opening Remarks from Chair
Chris Curry, Director of the Pensions Policy Institute
Chris Curry is the Director of the Pensions Policy Institute (PPI) with overall responsibility for leading and managing the PPI. Chris originally joined the PPI as Research Director in July 2002 and was responsible for the research programme for eleven years. At the PPI Chris has authored and presented a number of research reports analysing pensions (including state, private and public sector pensions), pension reforms and other provision for retirement income.
Paul Sturgess, Director – Pension Administration and Strategy, Equiniti
Equiniti specialises in providing finely-tuned finance and administration services, as well as smart technology solutions, in complex and regulated markets.
Refreshments & Networking Break
Jeff Houston, Head of Pensions, Local Government Association
Development in Public Pensions
Andrew Pennie, Marketing Director, Intelligent Pensions
Andrew has worked in financial services for over 20 years and for a number of household brands, including Santander, Ernst & Young, Lloyds and HSBC. He has worked in both the intermediated and direct markets and undertaken roles in Marketing, Sales, Project Delivery and Product Development.
Lesley Alexander, Managing Director, Ferrier Pearce
Lesley is a Fellow of the Pensions Management Institute and sits on the Institute’s Council and Board. She was also recently appointed as Chair of the UK Sustainable Investment and Finance Association and was formerly a member of the Advisory Committee of the Money Purchase Pensions Forum.
Benjamin Kelly, Behavioural Economist, Blackrock Investment Institute
Understanding Behavioural Biases in Retirement Planning
Lunch & Networking
George Graham, Chief Finance Officer and Managing Director, Local Pensions Partnership Ltd
Pondering on Pooling in Local Government Pension Schemes
Stephen Bowles, Head of UK Institutional Defined Contributions, Schroders
‘Justifying the Investment budget in DC’
There is a relentless pressure to reduce the costs and charges incurred in the delivery of DC pensions and the investment component has certainly not escaped scrutiny. There is no doubt however that investment matters in determining good member outcomes and therefore we feel justifies a fair share of the overall budget. We will explore why investment matters, what characteristics it needs to exhibit and how we can go about implementing a robust investment solution.
Joseph Clease, Principal Economist, Department of Work and Pensions
‘Reforming the current UK pensions system and the government’s vision’
Neil Duncan-Jordan, National Officer, National Pensioners Convention
The National Pensioners Convention was founded to fight for a better deal for pensioners. It campaigns on issues such as universal pensioner benefits, fuel poverty and an increase of state pensions.
Closing Remarks from Chair
Close of Conference
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- The implications of reduced tax relief
- How reduced pension tax relief could improve childcare
- The impact of the raised pension age
- Closing the gender gap in state pension age
- The role of businesses in workplace auto-enrolment
- Improvements to accessing pension savings
- Dangers of lump sum pension withdrawals
- The potential impact of ISA style pensions
Who should attend?
Trustees, Scheme Managers, HR Managers/Directors, Chief Investment Officers/Investment Managers, Finance Managers/Directors, Directors of Finance and Treasury, Chief Executives, Professional Financial Advisers (IFAs), Accountants, Independent Actuaries, Independent Consultants, Pension Managers and Officers, Human Resources, Fund Managers, Account Managers, Treasurers, Audit Managers, Finance Officers and Directors and Corporate Services Managers, and will be drawn from central government, local authorities, health and education sectors, pension providers, insurance companies, legal practices, think tanks and the voluntary and private sector.