UK – With the Pensions Bill likely to be approved today, pensions minister Malcolm Wicks has said that in the future public employees could be required to retire at 65 rather than 60.
“But it would not be immediately, 59 year-old public_workers should not worry,” he told delegates of the Pensions Show.
In his keynote address Wicks said that the state was poised to play the roles of “pension provider, enabler and regulator”.
Wicks’ comments came as it appeared the long-awaited Pensions Bill was set to be approved by Parliament. The bill has had 672 amendments and has to be approved before Friday. Employers’ group the Confederation of British Industry called the Bill a “missed opportunity”.
Wicks said the basic pension is going to be a ‘solid foundation’ and the state will keep acting as a provider, but it will encourage workers to save through tax breaks as well and join pension schemes. “We are also looking at automatic enrolment,” he added.
“But there are questions not just for the government but for the industry as well. How do you restore public confidence in your product?” Wicks said, calling for the industry to give “more rigorous answers”.
The minister focused on the role of trustees and their responsibilities.
“Trustees are at the very heart of the UK pensions provisions system and we want to strengthen their role,” he said. “As pensions minister, I feel I do not hear enough from trustees, particularly from small schemes’ trustees.” The government recently said schemes should have 50% member-nominated trustees.
Wicks also said he was considering setting up a forum to help the government get in touch with trustees.
The forum could also tackle “dodgy dealings”, Wicks said in response to a delegate who asked for “strict and defined” criteria for trustee elections.
With the ratification of the Pension Bill, trustees will have to be “up to speed with their role” and have “a proper understanding” of risk, investments and funding strategies.
“We do not expect that they become professionals, but they should behave professionally,” Wicks said.
Trustees are set to have more powers as they will be required to reach agreement with the employers on issues like methods and assumptions to calculate technical provisions said a senior research actuary at Mercer.
Deborah Cooper said: “The process of reaching agreement with employers could be one of the more powerful aspects of the new funding regime.”
But she also warned about “possible indigestion” to be caused by “the multitude of fingers being poked into the funding pie”.
Nothing in the Pension Bill makes either the design of pension scheme or the administration of pension schemes simpler, said Pensions Ombudsman David Laverick.
He told IPE: “I would have a limited model of an occupational pension scheme and require those schemes that wanted some tax advantage to subscribe to that particular model.”