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Jamie Clark: Get set for an interesting year for pensions

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Despite the subject matter, there is never a dull moment in pensions and 2014 has the potential to be the most interesting year yet. 

Here are some of the developments we can expect:

DWP charges consultation – Government response due in January/February 2014

Arguably, the most contentious DWP proposal is for a charge cap on all qualifying pension schemes. Those opposed include some providers, industry commentators, the NAPF and the OFT; those in favour include consumer organ-isations and some providers.

Royal London is strongly against a cap as we believe consumer interests will be better served by allowing competition to drive charges down. A cap will result in many unintended consequences while delivering little benefit to consumers.

The DWP consultation also looked at deferred member penalties (or active member discounts). These look likely to be banned for employers staging from 2014 and schemes already in place will probably have to comply with this ban eventually, leading to some providers re-pricing existing schemes.

OFT proposal for independent governance committees – summer 2014

The OFT report on workplace pensions recommended that IGCs should be set up for all workplace pension schemes. 

The Association of British Insurers has confirmed a commitment that all of its members which provide workplace pensions will have IGCs set up in the first half of 2014. 

This should result in overarching independent governance of provider solutions. Crucially, however, there will still be a need for governance at individual scheme level – a role that advisers can fill to add further value to their proposition.

Capacity crunch – from April 2014

With the sheer number of employers reaching their staging date in 2014, many thousands of firms will be looking for help in setting up their auto-enrolment scheme.

The message from nearly all quarters is clear: employers and their advisers must plan well ahead if they are to put in place a compliant, tailored solution with the least impact on their day-to-day business.

Some people seem to be suggesting that it can all be sorted out in a matter of minutes but experience has shown that employers and advisers have a huge amount of work to do many months ahead of staging. 

Starting early is essential. This is the message from The Pensions Regulator and we must reinforce it.

Jamie Clark is business development manager at Scottish Life

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