Well, the leaves are falling, there’s a bit of a chill in the air, and the shops are already trying to make us buy mince pies. That can only mean one thing…winter is coming. Whilst the hugely popular TV show “Game of Thrones” may be off UK TV screens again for a while, the drama continues within some of the major UK pensions institutions doing battle for supremacy. So who will prevail and what lies beyond the Wall?
- The joining of three Houses: The government announced in the 2016 Autumn Statement a proposed merger of the Pensions Advisory Service, Pension Wise and the Money Advice Service to form a single public body offering advice on pensions, debt and personal finance generally. Following a recent consultation, it has now announced that the merger will be going ahead. There is certainly logic in having a single, convenient reference point for dealing with all financial questions. However, there is a risk that some of the good work in promoting Pension Wise following the introduction of the new DC pension freedoms may be undone, at least in the short term. Given the specialist nature of pensions advice (and advice in other areas for that matter, such as personal insolvency), concerns have also been expressed that the new service could become a “jack of all trades”. The new service will therefore need to ensure that its advisers are provided with adequate resources and training.
- A regulatory alliance? Or will confusion reign? Following the introduction of the freedom and choice reforms, an increasing number of people are requesting transfers of their defined benefit pension benefits into personal pension schemes. This trend may lead to an increase in collaboration between the Pensions Regulator (which governs occupational pension schemes) and the Financial Conduct Authority (the regulator for personal pension schemes). The FCA is keen to ensure that members are adequately protected when transferring their pensions and has initiated proposed changes to the advice requirements that apply primarily when a person transfers “safeguarded” (i.e. defined benefit) rights to a money purchase arrangement. Meanwhile, the Pensions Regulator already has its own initiatives to protect members, most notably its “scorpion” pension scams materials. Will the FCA and the Pensions Regulator form a helpful alliance to ensure individuals get a consistent message about their transfer rights and the potential risks of DB pension transfers? Or if the two regulators do not form a consistent approach in their guidance to members, is there a risk that confusion could reign?
- Will the Treasury take the Iron Throne of influence on pensions policy? Traditionally, the Department for Work and Pensions rules the roost when it comes to pensions policy. However, the Treasury increasingly has its sights set on the Iron Throne, particularly following the 2015 freedom and choice reforms, which were a Treasury initiative. The current pensions minister Guy Opperman MP (Parliamentary Under Secretary of State for Pensions and Financial Inclusion, minister for private and occupational pensions, overseer of state pension age reviews, the first of his name, mother of dragons etc.) sits within the DWP (with a cabinet status below that of previous Pensions Ministers. And with the squeeze on public finances set to continue, might we see further tax-driven pensions law reforms as the Master of Coin (aka the Chancellor) comes under increasing pressure to balance the books?
And finally, what of Workie, the DWP’s auto-enrolment mascot? We haven’t seen him for a while – is he hiding behind the Wall or has he had an encounter with some Dragon Glass?