On Tuesday 2nd September, I spoke in the debate during the Second Reading of the Pension Schemes Bill. This Bill is part of a series of measures the Government have undertaken to reshape and improve the UK pensions market to provide far more certainty and choice. Currently the market is dominated by defined contribution pensions, where the risk is wholly on the individual and an individual has no guarantee as to what their pension income will be in retirement. What the Government proposes in this Bill represents a radical restructuring which will ensure the UK pension offers consumers a choice and remains relevant for future generations.
This Bill looks to encourage pension arrangements that will:
- Offer more certainty in retirement with defined-ambition pensions. Under these schemes people can expect better returns and more certainty about what income they can expect in retirement as risk is shared between a number of consumers. Defined-ambition schemes offer consumers a promise of the outcome – what income the member will receive, the size of the savings they will accrue based on contribution and the rate of income their savings will buy them. With this type of pension, members get some degree of protection from fluctuations in the financial markets and a greater degree of certainty.
- Guarantee free, independent guidance to help people make choices about which pension scheme will best suit their needs, something that many people do not have access to at the moment. The Chancellor has provided £20 million over the next two years to develop this new right to advice.
- Remove the need to lock yourself into an awful annuity – changes this Government is making will mean people can choose how they access their pension savings; and instead of being forced to buy an annuity, you be able choose to take your pension savings as a lump sum, draw them down over time or go for an annuity.
I support the provisions included in this Bill, as I believe it will introduce much needed flexibility into this market -giving people the chance to have the retirement that they want without being ripped off by the annuity market. This Bill will make provisions for the consumer to understand what is best for them in retirement and have some degree of certainty about what income they can expect in retirement.
Following my contributions to this debate I was appointed to the Pension Schemes Bill Committee, please contact me at nigel@nigelmillsmp.com if you have suggestions about what provisions would improve the UK Pension market in the future.