Queen’s Speech 2016: More protection for pension savers
The Queen delivered her annual speech today, setting out the government’s priorities for the next year, including new measures to protect pension savers.
She covered a wide range of measures including a drastic shake-up to prisons and improved opportunities for children in care.
You can read the full speech here.
But in terms of key policies affecting your pension, here are the main three:
More protection for savers in master trusts
There will be better protections for automatically enrolled savers with money in master trusts – multi-employer pension schemes – often favoured by small firms. Master trusts have been criticised for their lack of transparency and experts suggest people’s retirement savings could be at risk if the master trust goes bust.
The Pensions Regulator will be given more powers to authorise and supervise these schemes.
Master Trusts will also have to demonstrate that schemes meet ‘strict new criteria’ before accepting funds – although there’s no detail on what these will be.
Tom McPhail, head of retirement policy at Hargreaves Lansdown, said: “Millions of employees are being auto-enrolled into workplace pensions, money is being taken out of their pay packets and handed over to pension schemes which the employee had no hand in selecting. There is a clear responsibility for the government, employers and regulators to ensure that all auto-enrolment schemes are fit for purpose.
“Unfortunately, whilst the vast majority of schemes are very well run, isolated pockets of risk exist with small schemes being run by organisations with limited resources and over which the regulator has only limited influence. These schemes could not only cost members money, the failure of even one could taint the whole pensions industry by association.”
Pension exit charges will be capped
The government is introducing legislation capping early pension exit fees to allow savers to access their retirement savings without being hit by excessive fees.
The Treasury launched an investigation into early exit fees last summer following reports of investors experiencing problems accessing their retirement savings, especially in light of the new pension freedoms.
McPhail said: “Pension exit penalties have no place in the pension freedom world. Any costs associated with transferring pensions should be limited to proportionate administration charges.”
New advice body for pensions
The government is restructuring how financial guidance is offered to consumers. The Pensions Advisory Service, Pension Wise and the pension services offered by the Money Advice Service, will be merged into a single body.
McPhail said: “Pension Wise has enjoyed limited success to date and the Money Advice Service struggled to demonstrate value for money. This restructuring of the free guidance is a welcome opportunity to rethink how free guidance can best serve consumers.”pension