Adequacy, consolidation and investment in focus as PLSA seeks reforms to improve UK retirements

The PLSA’s work programme is reviewed annually by its Policy Board, which comprises experts from a diverse cross-section of the PLSA’s membership and has responsibility for setting the policy agenda.

This year, with a two-part Pensions Review underway and the Pension Schemes Bill expected to be tabled in the coming months, the PLSA will advocate for reforms to the policy and regulatory regime that help everyone achieve a better income in retirement.

The PLSA’s core policy activity will be centred on the following themes:

Adequacy: Next steps for auto enrolment and decumulation

Automatic enrolment (AE) has been an unequivocal policy success story, but it is not perfect. Contributions remain too low for most people and the system does not adequately support under-pensioned groups, including women, gig economy workers, self-employed people and others.

The PLSA is carrying out work in 2025 to further refine the recommendations of its milestone Five Steps to Better Pensions report to identify ways AE can be developed so savers get better outcomes from the system without hurting their financial prospects in the here and now. A policy paper is expected to be published later in the year.

With measures for DC decumulation and a value for money framework expected in the Pension Schemes Bill, the PLSA will also work closely with Government to ensure legislation supports saver outcomes.

The influential Retirement Living Standards, which help people understand how much they might need to spend in retirement, will be updated in the summer.

Consolidation: DB, DC and LGPS

Pension fund consolidation is an ongoing structural trend that has been put in the spotlight by the Pensions Investment Review. The Government is exploring ways to accelerate the move to fewer, larger schemes and has proposed measures which would impact the structure of the defined contribution and Local Government Pension Scheme (LGPS) segments of the industry.

The PLSA supports consolidation where it demonstrably improves saver outcomes, such as through better returns or reduced costs.

As the Government develops its proposals, the PLSA will work with industry and policymakers, advocating for policy change that improves the system for savers without unduly distorting the market, eroding competition, stifling innovation or resulting in other negative unintended consequences.

In parallel, the PLSA will maintain a dialogue with government as it drafts the Pension Schemes Bill, so the legislation succeeds in delivering more financially secure retirements.

Investment: Productive finance, ESG and transition plans

There has been much debate about the role pension schemes play in generating economic growth in the UK over the last two years.

Fiduciary duty and investment strategies that serve the best interests of savers remain the primary drivers for pension funds. However, within that context, the PLSA advocates for policy and regulatory interventions which have the potential to make the UK a more attractive investment proposition for pension schemes. The PLSA wants to work with Government to help it grow the pipeline of home-grown investment opportunities for pension funds and promote a regulatory environment which can further support UK growth. At the same time, voluntary commitments to invest more of the nation’s retirement savings to productive finance in the UK, where that is in the best interests of savers, are actively being explored.

For DB schemes, higher interest rates and careful management mean funding levels are as strong as ever. With the Government signalling its intention to relax the rules governing the release of surplus to improve member benefits, support sponsoring employers and potentially generate growth in the UK economy, the PLSA will be working to ensure the right safeguards are in place to ensure member benefits remain secure.

The PLSA will also continue to work with our members to help them achieve their net zero goals, by seeking policy change where needed, encouraging collaboration across the sector, and being at the forefront of the considerations on how the finance sector can respond to the climate emergency.

John Chilman, Chair, PLSA Policy Board, said: “As our busy work programme shows, there are a lot of regulatory and policy initiatives underway in the world of pensions. It is the job of the PLSA to use its expertise and influence to help ensure the system works as well as it can for savers. The PLSA Policy Board champions a policy framework that means people will have an adequate income in retirement and pension funds have the right regulatory and operating environment to deliver improved retirements.”

Zoe Alexander, Director of Policy and Advocacy at the PLSA, said: “The two-part Pensions Review and Pension Schemes Bill mean 2025 is likely to be a watershed year for the pension industry setting in train significant change in the structure of the market with the aim of delivering better returns for members over time.

“The PLSA Policy Board has approved an ambitious work programme that will enable us to ensure reforms deliver the best possible outcomes for savers, as well as getting ahead of the debate to consider the big issues we face as an industry heading towards the 2030s.”

Mark Smith, Head of Media Relations

020 7601 1726 | [email protected]

Cali Sullivan, Senior PR Manager
020 7601 1761 | [email protected]