Today KPMG has responded to the Government’s Pensions green paper which consults on how to better ensure sustainability and security in defined benefit pension schemes.
Commenting David Fairs, Pensions Partner, KPMG UK said:
“We have proposed a number of recommendations to significantly simplify complex benefit structures to help people properly understand the pensions they have worked so hard to acquire, whilst also removing the unnecessary administration cost of maintaining overly complex structures. Changing regulation has meant that all schemes have ended up with multiple ages at which members become fully entitled to their benefits and different levels of pension increase applying to different elements of their pensions.
“In our view simplification would not only boost consumer engagement but it would also solve some of the hurdles facing the creation of the Government’s pensions dashboard. The multiplicity of designs in defined benefit arrangements is proving a real headache. Include all the information in the dashboard and it overwhelms people, but including only high level details and it is potentially misleading and also prevents innovation by fintech companies to use the dashboard for robo advice/guidance. Collating all the details of defined benefit pensions in a way that doesn’t drown the system in detail is a big ask, simpler, standardised benefits would make that job a lot easier.
“Simplification would also facilitate consolidation of smaller defined benefit schemes. Consolidation would be a significant benefit for members through better governance of their arrangements, stronger administration and investment and ensuring better outcomes. Consolidation into fewer, larger arrangements would also facilitate a better regulated environment.
“We have also suggested that Pension Wise is extended to offer support on defined benefits. Many people approaching retirement have a mix of defined benefit and defined contribution, with multiple options from each on how they take their benefits. This adds an extra layer of complexity to the options. To maximise the value of the expanded Pension Wise service the Government could alert people at critical ages, 50, 55 or 60, that the service is there to help.”
Notes to editor:
For further information please contact:
Christina Bridge, KPMG UK
T +44 (0) 207 311 4252
M: +44 (0) 778 950 4905
KPMG Press office
Tel: +44 (0) 207 694 8773
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