Listening up or talking down; what do you want from the Pensions Commission?

Richard points what must matter to the Pension Commission. The voices of ordinary people, many of whom suffering from fear of the future, some of whom suffering from deprivation today. Making what we have coming in , pay the bills that go out; that’s what IFF’s and YouGov’s reports talk about. It doesn’t always happen.

Here is another way of looking at the Pension Commission, one that gives auto-enrolment a reset.

I don’t think the Pension Commission’s job is to please the pensions industry but to find a way forward for those the pension industry serves. But here is the unanimous voice of the ABI , TISA and Pensions UK.

Getting to a 12% contribution rate

The Association of British Insurers (ABI) has explicitly called for the Pensions Commission to “set out a clear roadmap for gradually increasing automatic enrolment pension contributions from 8% to 12% by the end of the 2030s”.

This would require a “carefully phased approach” to protect affordability, the association said in its response, but could lead to significant boosts to individuals’ pension savings.

The Investing and Saving Alliance (TISA) also supported higher contributions through auto-enrolment. It warned that delaying this transition would “leave millions of savers facing inadequate retirement incomes”, and called for a six-year timetable for raising contributions to 12%.

Let’s see what the solution that the pensions industry is

“The next phase of pension reforms will also need to command broad consensus if it is to stand the test of time,” the ABI said. “Achieving lasting change will require government, the pensions industry, employers and unions to work together to improve retirement outcomes.”

I can see three out of the four parties to this consensus objecting. The government have a responsibility to those who elected it not to increase tax and a nudge is as good as a tax for most tax-payers. The unions are fed up that workplace saving is now targeted at wealth and not deferred pay. Employers are telling me that they have recently been asked to pay increased national insurance to meet benefits that include benefits paid in retirement.

There may be consensus among those who manage people’s savings pots that those pots are underpaid (relative to their expectations) but  to suppose that these people are going to target the Pensions Commission on delivering greater savings into DC workplace pensions looks unlikely.

We need three people solving problems from the bottom up; the Commission’s listened  plenty to the pension industry talking talking down from on high.