Pension funds ‘creaking’ under red tape as costs rise over five percent

Pensions: Money Box caller talks impact of age differences

We use your sign-up to provide content in ways you’ve consented to and to improve our understanding of you. This may include adverts from us and 3rd parties based on our understanding. You can unsubscribe at any time. More info

A report today from the Association of Consulting Actuaries (ACA) found over half of employers expect costs of managing pensions schemes to increase again next year. The onslaught of changes to pension legislation has also led to nine out of ten employers surveyed expecting to struggle to find individuals willing to become trustees. Just over three quarters expected to see more trustees resigning due to the responsibilities they are expected to take on. Chair of the ACA Patrick Bloomfield said: “The pensions industry is creaking under the weight of too much legislative change being pushed through at the same time.

“The pace of change in pensions is pushing up costs and discouraging people from being trustees.

“Unless steps are taken to manage the pressures being put on schemes we risk killing off the UK’s traditional model of trusteeship”.

Speaking to partner at Lane Clark and Peacock and former pensions minister Sir Steve Webb suggested the burden would leave employers having to find more money to pay for the rising costs of their schemes.

This extra expense could potentially leave less available for employer contributions to new schemes harming current workers.

Sir Steve also raised concern at the difficulty of recruiting trustees, saying: “you want professional expertise but you also want member representation.”

Trustees are typically members of the pension scheme, employees or both and are tasked with ensuring the scheme is run properly.

Their duties include areas such as appointing professional advisers, holding and taking records of meetings and taking investment decisions.

Over time though the number of obligations has increased including plans for trustees to have to consider the impacts of climate change on their pension scheme and its investments.

Sir Steve explained more demanding regulation for trustees had made it “harder and harder to do the job” including the risk of being jailed.

Since the 2021 Pensions Schemes Act, impacts on a company’s pensions scheme also have to be factored into every business decision.

Sir Steve recognised regulation was “there for a reason” but though it often had the best of intentions there were many unforeseen circumstances.

He suggested “making it clearer would be the most useful thing.”

UK house prices soar to record highs – Key reasons behind market surge [ANALYSIS]
Trader loses almost $2m Bitcoin fortune after password theft [REVEAL]
Boris Johnson: All new homes to have electric vehicle charging [LATEST]

A new area for pensions funds to get to grips with will be pension dashboards, currently due to launch in 2023.

The programme intends to give people a digital platform where they can view all their pension information securely in one place.

However, the ACA survey finds preparation going worryingly slowly given the intended launch date with only half saying they had taken any action to prepare data.

Around the same number added they supported dashboards being launched with only basic details.

Source: Read Full Article