UK should consider shift to collective individual DC funds – report

first_imgThe UK should consider the launch of collective pension provision based around the more individualised approach being debated in the Netherlands, a wide-ranging report on the future shape of the pensions industry has urged.The 600-page report, written by David Blake of the Pensions Institute at the behest of the opposition Labour party, also suggested the National Employment Savings Trust (NEST) be allowed to provide income-drawdown products to all savers in an effort to lower costs.The suggestion was made after recent changes allowed savers to access pension pots from 55, and ended a previous requirement to annuitise.Blake’s report, likely commissioned in 2014 to function as a policy blueprint had the Labour party won the 2015 election, also proposes an overhaul of the UK’s regulatory architecture, merging the Financial Conduct Authority with the Pensions Regulator, while introducing ‘safe haven’ pension providers that could be recommended without risk of later lawsuits over mis-selling. The academic said the Review of Retirement Income (IRRI) report was necessitated by the shift in retirement provision caused by the liberalisation of pension savings, labelled pensions freedoms.The shift away from annuities to pay out income in old age marked a “monumental change” for a market that was previously home to around half of the world’s annuities, Blake said.The report set out to examine how the risks associated with drawing down retirement income – rather than having a guaranteed income stream for life – should be explained to savers.Revisiting defined ambitionBlake touched on the role of collective defined contribution funds – part of the defined ambition agenda introduced by previous pensions minister Steve Webb – and argued that the idea of risk-sharing was still feasible in a world where members had access to savings from age 55, as long as the scheme allowed for individual accrual.The report examined a number of risk-sharing approaches employed across the world, including the use of deferred annuities by Denmark’s ATP, and recommended the introduction of collective individual defined contribution (CIDC).CIDC funds, the report said, would exploit economies of scale and allow risks to be pooled.When asked, Blake said the approach could be modelled on discussions occurring in the Netherlands, where policymakers have sought to avoid a shift towards individual DC funds as used in the UK.Benchmarking decumulation strategiesThe report further recommended that a vehicle akin to the National Employment Savings Trust (NEST) be launched to act as a benchmark for decumulation strategies, able to set standards and cost levels other providers would need to match to remain competitive.The focus on NEST was also in line with Blake’s proposal to see retirement income offered by institutional investors, rather than savers previously auto-enrolled into institutional providers being asked to access the retail market on retirement.“In many respects,” the report said, “scheme drawdown is a natural extension of the default fund used by modern multi-trust, multi-employer schemes for the auto-enrolment accumulation stage.“It is also a natural extension of the trustees’ governance role and fiduciary duties, which, prior to [the introduction of pension freedoms], ended very abruptly when members were steered towards the purchase of [lifetime annuities] at the point of retirement,” it said.One of the report’s key proposals also built on previous work by the Turner Commission, which recommended the introduction of auto-enrolment in 2005.The launch of a Pensions, Care and Savings Commission would provide independent scrutiny of the pensions freedoms, Blake suggested, and help establish what he saw as the absence of a national narrative around retirement savings.The idea was previously proposed by the National Association of Pension Funds, the Association of British Insurers and the Trades Union Congress.last_img read more

Poyet still believes in survival

first_imgGus Poyet admits he would not still be Sunderland’s head coach if he did not think the club could preserve its Barclays Premier League status. He said: “If you said to me on October 8 when I walked in here at 11.45pm for the first time that I was going to be in this situation with 12 games to go, I would have taken it, I would have. “I would have for sure because it was looking impossible, so now I am here, I am not going to complain and moan. “I am taking it and making sure we maintain the level of performance that we have had in the last three months and if we maintain that, I think we have got a great chance to stay up.” Whatever happens over the next two months or so, there will be work to be done during the summer, and much of it will come under the remit of newly-appointed sporting director Lee Congerton. Poyet said: “I am convinced the most important part in football nowadays is recruitment. “If you recruit well, a big, big part of the manager’s job is much easier; when you recruit averagely, you have got a massive job and if you recruit badly, all the best. “That relationship between manager or head coach and sporting director or head of football operations, whatever you want to call him, is a key part, massive. “It needs to be clear and honest and straightforward. It’s not like one is working for the other. “It’s simple: He needs to bring the best players for me to be able to play the football that I want and to be successful.” That, coupled with runs to the Capital One Cup final and the last eight in the FA Cup, has increased his conviction that salvation remains in their own hands. Poyet said: “That’s why I am here. If not, I would be gone, I can promise you that. I wouldn’t stay here if I was not convinced it was possible. “I am not that type of person that would just lie to myself and lie to people, ‘Yes, yes, yes, it’s possible’. “Maybe I am making a mistake, who knows? But again, I believe it’s possible because these 19 games I have been in charge have proved to me – we have taken 23 points – it’s possible. “If we take 13, 14 points [from the remaining 12 games], it’s going to be close to that 40, 37, 38, 39 – who knows?” Poyet has set his players a target of five victories to ensure their continued presence in the top flight, although the fact that they have managed only six so far is a measure of the problem that could present. There have, of course, been high points during a difficult campaign with a derby double over Newcastle, a league victory over Manchester City and cup successes against Chelsea and Manchester United providing evidence that the Uruguayan’s methods are working. However, there have been bad days too, and the 46-year-old knows his team cannot afford too many more of those. Press Association The Black Cats return to league action against fellow strugglers Crystal Palace on Saturday sitting inside the bottom three with 12 games remaining and knowing the survival fight in which they have been engaged almost from the start of the season is likely to continue until its death throes. Poyet inherited a side which had claimed just a single point from the first 21 it had contested by October and has managed to boost the total to a more respectable, but still insufficient 24 over the 19 league fixtures to date of which he has taken charge. last_img read more