Reviewing DC pension provision in the UK

In the autumn of last year at the 2011 Gleneagles Conference, TheCityUK was asked to chair a workgroup to look at the pensions market in the run up to auto enrolment and the introduction of NEST (National Employment Savings Trust). As readers will know, the Government (with cross bench support) requires all employers to set up a pension scheme into which both they and their employees will be able to pay into.

All employees with be auto enrolled into the pension scheme unless they ‘opt out’ and, based on the principles of behavioural economics, it is likely that the vast majority of employees will stay in the scheme. Over time this will give these employees a larger pension pot and do much to improve the living standards of retirees.

Whilst the Government established NEST as a provider of last resort (or choice) it was always recognised that the private sector would play a key part in the new auto enrolment pension world and this is where TheCityUK comes in. As a body that is both impartial and independent, we have been asked to look at the ability of the Defined Contribution (or Money Purchase as some call it) pensions market to deliver cost effective and accessible pensions solutions. 

In December we issued a ‘Call for Evidence’ and we are already analysing a number of interesting responses, have meetings arranged with industry leaders and are planning a major conference at which the industry will be brought together to exchange views and ideas.

It is too early to know what our final report will say, but we are committed to providing a clear and simple set of conclusions that doesn’t just simply rehash existing knowledge or material. We are really excited about this project and over the coming months I will continue to share with our progress with you.