As the Chancellor prepares to deliver his third budget, here is our round-up of the pensions industry’s most-wanted changes.
Rethink QE
The Bank of England has defended QE, saying the policy has driven up the value of other assets within pension funds, but the policy remains unpopular due to its adverse effects on annuity rates.
The Society of Pension Consultants has called for an end to QE after the £50bn round announced earlier this month (PP online 9 Feb).
However, Saga director-general Ros Altmann said credit easing should be scrapped and replaced with a system that fast-tracks money to small businesses.
“We should end the gilt-buying spree that has such dangerous consequences for our pension system and use any new money to set up a fund to lend or underwrite lending to improve growth and jobs prospects,” said Altmann.
“Using any newly created money to underpin direct small company lending, bypassing the banks, would be far more effective than credit easing which still relies wholly on the banks to lend at decent rates.”
More medium-term gilts
Although it is rumoured Osborne will announce an issue of 100-year gilts, the National Association of Pension Funds, the SPC and Saga have all said super-gilts are unattractive to funds (PP Online 14 March).
The organisations called for an issue of medium-term gilts, such as those of 20-40 year duration to match schemes’ needs.
Make infrastructure accessible
Osborne has made much of his plan to create a Pension Infrastructure Platform, through which the NAPF has agreed to invest £20bn into UK infrastructure projects.
The SPC has called for the PIP to make infrastructure investment accessible for schemes of all sizes.
The Confederation of British Industry has also supported the move towards private infrastructure funding, saying infrastructure must become a mainstream asset class available via pooled investment platforms.
Pension Protection Fund chief executive Alan Rubenstein has said the PPF isworking towards ensuring that the PIP will allow schemes to invest in infrastructure without taking on greenfield risk, in order to make it more appropriate for their risk strategies (PP Online, 8 March).
Confirm state pension reform
The government has yet to publish a white paper on state pension reform, having pledged at the last Budget to implement a single-tier state pension from 2015.
The NAPF said occupational pensions can only be invigorated if the government provides a solid foundation to pension provision via the state system.
“The government must urgently press ahead with its plans to reform the state pension. Radical reform will ensure that people who save into a pension can do so with confidence and ensure that auto-enrolment is a success,” the NAPF said it its pre-budget submission.
Stability
Pensions legislation is riddled with complexities after successive governments have brought in sweeping reforms.
For that reason, the SPC said that ideally the Chancellor should make no changes at all to pensions this year, and if he must, the government should consult before any more reforms.
Professional Pensions | 21 Mar 2012 |
By PP Staff