As minister for pensions and financial inclusion, I understand how important it is to promote the business community and support job creators.
But I am also acutely aware the government needs to find the right balance between encouraging business and protecting people who are working hard for their families.
In pensions, this balance is especially important as they are our collective investment in our futures.
In order to balance the needs of businesses and employees, we have introduced new measures that will help firms move their people into more efficient pension schemes.
Allowing businesses to close occupational defined contribution schemes more easily will reduce burdens on employers and potentially free up costs for reinvestment. This will result in better returns for those who have invested in the pension scheme, leading to better outcomes in retirement.
Aon Hewitt’s 2017 survey of DC schemes found a third of those running their own trust-based schemes expected to move to master trusts in the next five years.
With many DC schemes keen to close, businesses are looking to reduce sponsoring employer burdens or take advantage of economies of scale to benefit their members.
Previously, transferring groups of members out of occupational DC schemes required trustees to obtain either individual consent or the certification of the new, proposed scheme via a complex actuarial process.
The legislation introduced this year has removed these ineffective, time-consuming and costly barriers. It has introduced the freedom to use an independent adviser to assess the proposed scheme, and in future to allow transfers to authorised master trusts without a legal requirement for additional advice.
The simplifications will assist in the ongoing consolidation of the DC market.
These regulations recognise that the pensions industry is changing, and that rules need to evolve and develop alongside that. The changes will ensure employers are better placed to decide how best to support the retirement plans of their employees, without the worry of unnecessary and costly burdens getting in the way.
Pension scheme members retain the protection of the charge cap, which they will carry into the new scheme. Additional protection is afforded by the need for independent advice.
Balancing the protections of employers with promoting business is crucial to the long-term efficiency of pension schemes. People are living longer, healthier lives, and the pensions market is evolving to meet these new demands. This government is committed to maintaining this balance.
Guy Opperman is minister for pensions and financial inclusion