The UK government has been urged to share the details of the second phase of the Pensions Review “soon” after a notable absence in the Mansion House speech delivered by the chancellor of the exchequer Rachel Reeves yesterday.
In her address, the chancellor announced a number of reforms, including the Leeds Reforms, aimed at boosting retail investment to drive UK growth. Reeves also covered a framework for captive insurance, targeted support and making it easier for firms to set up in the UK.
The government has also reiterated its commitment not to mandate investment in unlisted equities for pension schemes, praising the commitment the schemes made under the Mansion House Accord.
However, it was the lack of mention of automatic enrolment or pensions adequacy that was most surprising, especially to those that have expected it to feature in the chancellor’s speech.
The UK pensions review, promised by the Labour party as part of its manifesto prior to the UK’s general election in early July 2024, was announced a couple of weeks later in the King’s Speech.
When launching the first phase of the Pensions Review last August, which focused on investment, the government said the second phase would start before the end of 2024, and that it would consider further steps to improve pension outcomes, including assessing retirement adequacy.
However, the second phase of the review was frozen following the publication of the interim report on the first phase.
The industry was at the time disappointed, calling it a “fundamental issue” and claiming that delaying it would be “damaging” for industry confidence in the “ability for real change to take place”.
The Pensions Management Institute (PMI) was in particular disappointed that the speech failed to mention phase two of the Pensions Review.
Helen Forrest Hall, chief strategy officer at PMI, said: “This silence marks a missed opportunity to address the long-term adequacy and sustainability of the UK’s pensions system.”
Forrest Hall said part two of the review is a “critical moment” to rethink how the industry supports people across their financial lives. “Yet [yesterday’s] speech offered only limited signals that the government is ready to embrace the scale of reform needed,” she said.
She urged that retirement adequacy “cannot be solved in isolation”.
“We must break down product silos and build a lifetime savings framework that reflects how people actually live – balancing pensions, ISAs, housing and emergency savings,” Hall noted.
The Institute urged the government to reassert its commitment to phase two and engage with stakeholders to deliver a system that works for people, not just products.
Hannah English, head of DC corporate consulting at Hymans Robertson, also found the absence of any reference to the Pensions Review in Reeves’ speech disappointing.
She said: “We are keen to see the government launch this as soon as possible and would be supportive of the government reviewing how adequacy can be addressed for both the employed and self-employed.”
Steve Webb, partner at LCP, said that issues covered in the speech are “important”; however, he said that a more fundamental issue is the “inadequate” level of pension savings in the UK.
“This is why we urgently need to see details of the second phase of the pensions review, and in particular, whether it will set out a timetable for increases in mandatory rates of pension saving under automatic enrolment,” he said.
“Unless this issue is addressed, all other reforms are likely to be of second-order importance”.
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Pamela is IPE's UK correspondent.
Before joining IPE in May 2023, she spent five years writing about the insurance industry.
During her career so far she won awards for Most Promising Newcomer in 2020 and Best Investigative Article in 2022 from the British Insurance Brokers Association, and was also highly commended at the WTW Media Awards for Insurance Features Journalist of The Year.View full Profile
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