Jenny Sims listens to the arguments for changes to help raise living standards
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- TUC conference 00:00
Two topics – the Pensions Review and the National Wealth Fund – dominated discussion at the TUC Pensions Conference in London in April. The focus was on how changes to the pensions system could and should be brought about. While attention was paid to ensuring people save enough for retirement, the debates relevant to existing pensioners were the changing pensions landscape and tackling pensioner poverty.
Kate Bell, the TUC’s Assistant General Secretary, set the scene by quoting from a 1973 pamphlet – What about the pensioners? – by Jack Jones, former General Secretary of the Transport and General Workers’ Union and founder of the National Pensioners Convention: “The government and indeed the whole community has got to understand that the case for a better deal for the aged is based on hard facts and not just sentiment, but all of us have to remember that it is people we are talking about not mere statistics. The facts are on the side of the pensioner but time is not.”
Although written more than 50 years ago, when pensioner poverty was at a much higher rate than today, Bell said the pamphlet still set out “a pretty good agenda for today’s conference”. Bell welcomed the government’s “wideranging” Pension Review and pointed to the TUC’s willingness to work with government, employers and unions on this. She laid out the TUC’s position on a range of issues, including support for more risk-taking by big pension funds such as local government funds. But she wanted to see more employee and pensioner membership on trustee boards
to ensure regulation, oversight and good governance.
To achieve its goal of reshaping the pensions system, the government “must look at security of income”, she said, which the current system didn’t do.
Crediting a previous Labour government for setting up auto enrolment (AE), and cross-government support by a subsequent coalition government for its success, she said: “That got 10 million workers saving into an occupational pension – but the job’s only half done.”
While supporting moving to a system of fewer, bigger AE schemes, she added: “We know consolidation alone isn’t enough. Bigger isn’t always better. So alongside scaling up, we need strong regulation, higher levels of governance and
membership oversight.”
She concluded: “Pensions must not just enable people to live, but to live well.”
Minister’s pledges
New pensions minister Torsten Bell (no relation to Kate), a former chief executive of the Resolution Foundation, said he would be “honest” about the government’s Pensions Review phase 2 priorities.
“Getting the best value for savers comes before a discussion about savings levels,” he said. The Pensions Review will aim to “start the country investing in its future”.
Currently the UK is a low-investingcountry. “Only one G7 country, Germany,
invests less than us,” he said.
The Labour government will be “putting a stop to the boom and bust in public investments,” Torsten added. “We need higher levels of productive investment, including pension schemes.”
Australian and Canadian pension schemes were investing in Britain, and the government would be supporting UK pension funds to invest in infrastructure schemes. Since coming into office, ministers had approved applications for solar panel farms that had been “sitting on desks for three years” and for building six reservoirs. “If you’re serious about net zero emissions, stuff has to be built,” he said.
Key points
- There will far fewer, larger pension funds, aimed at reducing management costs and getting better returns for savers.
- The government wants funds to be bigger risk-takers and to invest more in UK projects such as solar panel farms.
- Some local government funds have already accessed the National Wealth Fund to invest in community projects.
- Concerns were aired about the governance of pension boards. The TUC and others are calling for more employees and savers to be represented among trustees.
- There was a talk about a successful Canadian pension mega fund that had equal numbers of employer/employee representatives among the trustees.
- Tackling housing for older people is key to addressing rising pensioner poverty.
In a session on next steps for the Pensions Review, John Neal, national pensions officer for Unite, spoke about pensions savings adequacy. Although AE had been a big success, he said, it needed to go further.
He pointed out that:
• 17 million adults in the UK aren’t saving enough for the retirement they expect.
• 33% of those who think they’re on track are facing a shortfall of £100,000-plus.
• The last improvement in AE was when the minimum total reached 8% (5% employee, 3% employer) on 6 April 2019.
Neal said: “The last government legislated on 19 September 2023 to lower the AE
age from 22 to 18 to reduce the lower earnings time limit for qualifying earnings,
but failed to put a timetable in place for its implementation. We are still waiting.
Ultimately, we need the political will and conviction to bring about change.”
He urged the government to set a timetable for how and when to increase default workplace contributions, set up a Pensions Commission or annually assess whether AE savings levels are achieving decent retirement incomes.
In a workshop on how to raise incomes for the poorest, Daniela Silcock, director of Daniela Silcock Pensions Research, called for policy to focus on triple-lock/benefits, housing and older pensioners. “Older pensioners, especially women, are at high risk of poverty and do not receive the new state pension,” she pointed out.
The rising pensioner poverty rate – now at 16% of pension households, half of whom experience material deprivation – underscores the urgency of reform.
Call for consensus
At the start of the day, Torsten Bell said: “We need… an emerging consensus over finishing the job [of pension policy reform]. There is now a pretty big consensus about what needs to happen.” By the day’s end, after unions, pension funds, charities, a Labour peer and a former Pensions Commission member had had their say, that consensus seemed to be emerging.
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Pensions Review and National Wealth Fund
The new Labour government announced the setting up of a review of the UK pension market days after taking office last July. The first phase has focused on investments and how pension funds could support economic growth.
Two consultations were held: one on direct contributions (DC) schemes, the other on the local government pension scheme. A final report was due to be published this spring.
Chancellor Rachel Reeves put phase 2 on hold in December, reportedly because she didn’t want to add extra burden on businesses after increasing NI contributions in the October Budget. This phase will look at retirement adequacy, including auto enrolment.
The National Wealth Fund was launched in October, with £27.8 billion of capital to catalyse and mobilise additional private investment across the UK and help deliver the government’s policy on economic growth and its clean energy missions.
On 1 April, the day before the TUC Pensions Conference, the National Wealth Fund announced a financial guarantee of up to £400 million to cover a series of new loans provided by NatWest Group to registered providers for the retrofitting of social housing stock in the UK.
The conference also included a panel discussion asking: how can the National Wealth Fund work with pension schemes to deliver sustainable growth?
Phase 2 of the Pensions Review was put on hold by the Chancellor
