towards a new pensions commission
TRANSCRIPT
Towards a New Pensions
Commission
23rd February 2015
#pensionscommission
Welcome
Baroness Sally Greengross
ILC-UK
#pensionscomission
Welcome
Tim Fassam
Prudential
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Towards a new pensions
commission
Ben Franklin
ILC-UK
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Consensus revisited
The case for a new Pensions Commission
Ben Franklin, Senior Research Fellow, International Longevity Centre@ilcuk @bjafranklin
The case for a new Commission
• Policy change
• Progress since the last Pensions Commission
• Continued macroeconomic uncertainty
• Rising life expectancy
Policy change…
• Auto-enrolment
• Changes to State Pension:
– SPA
– Move towards flat rate
• New pension freedoms
• Extending working lives
• Public sector pension reforms
• Long-term care funding reforms
Progress since the last Pensions Commission
…saving more? Yes but from a low baseActive members of occupational pension schemes, 1953 to 2013 (millions)
Source: ONS
Progress since the last Pensions Commission
Progress since the last Pensions Commission
Probability of meeting target replacement rates at 8%
contribution levels
An economic recovery unconducive to saving
An economic recovery unconducive to saving
An economic recovery unconducive to saving
Continued rising life expectancy
Continued rising life expectancy
Continued rising life expectancyProjected changes in the State Pension age over the next 50 years
State Pension age
Legislated Young age Central Old age
66 2020 2020 2020 2020
67 2028 2028 2028 2028
68 2046 2036 2031
69 2049 2034
70 2063 2037
71 2040
72 2045
73 2051
74 2057
75 2064
Source: OBR
Year within which the rise is fully implemented
Population variant
Summarising the case for a new commission
• Retirement planning is difficult with numerous moving parts to consider.
• It has been made more complicated as savers have faced constant policychange.
• Combined with the perfect storm of falling real incomes, low investmentreturns and rising life expectancy.
• A new Pensions Commission is needed to rebuild consensus via broadconsultation and tackle the challenge of income inadequacy in retirement.
A blueprint for a new commission• Central focus on ensuring adequate retirement incomes for the long term.
• Based on consensus-based policymaking.
• Specifically focus on:
1) defining target outcomes for savings and extending working lives.
2) developing a mechanism to regularly monitor progress
3) deciding on whether new policy reforms are needed.
• Commission should set out the rights and responsibilities of individuals, employers andgovernment with respect to long term retirement income adequacy.
• Report to Secretary of State for Work and Pensions, Chancellor and Prime Minister.
• Headed by a group of 4 experts from; academia, charity sector, industry and employees.
• Not become a permanent body.
• Be set up immediately after the election but not seek to make recommendations until2017.
Many thanks
Ben FranklinSenior Research FellowInternational Longevity Centre - [email protected]: @ilcuk @bjafranklin
Rt Hon Steve Webb MP
Minister of State for Pensions
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Graham Vidler
National Association of Pension Funds
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Q&A
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Towards a New Pensions
Commission
23rd February 2015
#pensionscommission