‘Change is a certainty’ – Baroness Altmann lays out eight pension predictions for 2022

Pensions ‘shouldn’t be a government piggy bank’ says Altmann

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Baroness Ros Altmann has been a strong advocate for British pensioners, particularly in recent months as she spearheaded the attempts to reinstate the state pension triple lock. Despite those efforts falling short, Ms Altmann remains plugged in on all matters regarding pensions and retirement.

Speaking at the Pension Playpen Coffee Morning earlier this week, Ms Altmann set out a range of predictions for the pensions world in 2022:

Enhanced and improved defined contribution (DC) schemes

Ms Altmann is predicting that the Government will make more attempts to make DC work even better for members.

Regulation, regulation, regulation

A myriad of changes could come through in terms of statutory instruments that will flesh out some of the policy decisions the Government is making, including simplification and distribution of statements.

A focus on value for money in DC schemes

It remains unclear how this will manifest itself, with Ms Altmann questioning how this will be measured.

Pensions as a force for good

Ms Altmann believes 2022 could bring the requirement or encouragement of pension schemes to support green growth, build back better and help with the levelling up agenda, with the potential for Government to offer attractive projects to domestic pension funds.

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Changes to charges

She also discussed the idea that there could potentially be a move on allowing performance fees not to be part of the cap.

Diversified portfolios make sense

The global phenomenon of high inflation coupled with ultra-low interest rates is an ongoing problem for defined benefit (DB) schemes, and DC.

This high cost of inflation protection impacts inflation linked annuities, making staying in the markets a potentially more attractive choice especially in the early stages of later life or retirement.

DB Consolidation

Ms Altmann said: “We will see more super funds and consolidation, how that will work we shall see but there is merit in trying to get economies of scale.”

Auto Enrolment Reform

She also believes the ministerial steer will be towards increasing participation and possibly increasing contributions – represented by a redefinition of the bands such as reducing the £10,000pa threshold and removing the upper and lower age limits for auto enrolment.

Ms Altmann expressed her hope that in the new year, people will become more engaged with their pensions and be better prepared for retirement.

She said: “DC is the future, the penny has dropped and I believe we will find in 2022 the Government making more attempts to make it work better for members.

“Regulatory change is a certainty in terms of delivering on policy decisions, and I would expect to see auto enrolment reform lean towards increasing participation and contributions with existing levels and minimums stripped away.

“I hope pensions will be seen increasingly as a force for good and a catalyst for positive change, with requirements and encouragement for pensions schemes to support green growth and even help with the Governments levelling up agenda.

“Most of all I hope 2022 will be a year where people get to know their pension and take increased ownership. Pensions are not just about money, they are about people and creating a better life in retirement.”

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