Displaying items by tag: workplace pensions

Government and pensions regulators could force 'poor value' workplace pension schemes to close in a major shake up which could eventually be extended to SIPPs, according to one provider.

A simple 'red, amber, green' traffic light system for pension scheme value could bring better clarity to workplace pensions and boost savings but may harm innovation, pensions experts say.

After years of sharp growth in participation during the roll-out of auto enrolment, workplace pension growth has stalled, according to new data from the Department for Work and Pensions.

Savers with workplace pension schemes are significantly less likely to understand or engage with their pensions compared to their counterparts with personal pensions, according to new research.

Just over one in four workplace pension savers (26%) fear their pension pot will fail to provide enough to live on at retirement, according to a new report from the Pensions and Lifetime Savings Association (PLSA).

The percentage of workplace pension savers who actively stopped saving fell slightly during the Coronavirus pandemic, according to data released this morning.

The FCA wants improvements in the ‘value for money’ members of workplace pensions and some SIPPs receive.

The regulator has today launched a Consultation Paper on changes that may be needed to ensure workplace pensions scheme members get a better deal.

The launch follows a review which suggested some governance committees were “ineffective” in challenging firms to ensure value for money in workplace schemes.

Following the review the Consultation Paper has been brought forward.

The  Consultation Paper CP20/9 looks at ways to make workplace pensions better value for money.

The watchdog says its proposals aim to make it easier for Independent Governance Committees (IGCs) and Governance Advisory Arrangements (GAAs) to compare the value for money of pension products and services.

This should enable them to be “more effective” in assessing value for pension scheme members.

IGCs oversee the value for money of workplace personal pensions provided by firms like life insurers and some SIPP operators.

They provide independent oversight of workplace personal pensions in accumulation  and will oversee the investment pathway solutions that will have to be offered from 1 February 2021. IGCs act on behalf of consumers who are likely to be “uninvolved or less engaged” with their pension savings, says the FCA.

The FCA review found that:

• Some IGCs lack the necessary independence and were ineffective at challenging firms to ensure value for money for workplace pension scheme members
• Those IGCs which maintained independence from the firms whose pension schemes they had responsibility for delivered better outcomes for pension scheme members
• GAAs operated by third-party firms on behalf of pension providers were less effective at delivering meaningful improvements in value for money
• Over the period of the review (2017-2019) the FCA found there had been a “small reduction” in charges across all pension savings, although this has not been directly linked to IGCs and GAAs.

Megan Butler, FCA executive director of supervision - Investment, Wholesale and Specialists, said: “This Consultation Paper will help to ensure that pension scheme members are getting value for money.

“Our separate review into IGCs and GAAs lays out the key lessons that need to be learned to ensure that workplace pension holders get a fair deal.

“The FCA has carefully considered these findings and is asking firms that do not meet our requirements to make improvements.”

Overall, the FCA found that a number of IGCs were working well to provide value for money for their members however, a lack of consistency in the way they operate meant that members of some workplace pension schemes may not be receiving value for money.

The FCA has sent feedback letters to firms to ensure they make improvements to the way they work with their IGC or GAA.

The Consultation Paper has a deadline of 24 September and includes proposals for a framework for the annual IGC and GAA value for money assessment process, including a definition of value for money and three key elements of value for IGCs to use when conducting their assessments.

 • The Consultation Paper and the Thematic Review.

Scottish Widows has appointed Graeme Bold as director of workplace pensions.