Shadow pensions minister Alex Cunningham has set out his stall on how Labour would improve the UK pensions landscape.
Cunningham took on the role in October last year, and was welcomed into the post by the pensions industry who considered it a positive to have someone in place to scrutinise Government policy.
Speaking to Money Marketing, Cunningham outlines his top three priorities: pushing the Government on transparency of investment charges, creating the environment for introducing a collective defined contribution pension framework and making sure currently excluded groups are brought into auto-enrolment.
However, Cunningham is frank that he is still getting to grips with the complexity of pensions and the amount of items on his agenda.
He says: “While I will never claim to be a pensions expert I have a good general knowledge now and I understand the bulk of the issues going on currently. It is a heavy brief.”
At the Labour Party conference in September Cunningham announced the party’s support for collective defined contribution pension schemes and committed to pushing the Government to bring forward the regulations to put such a system in place.
CDC pensions are offered in the Netherlands and Canada and work by aggregating savers’ money into a single pot, with the objective of reducing investment uncertainty and creating economies of scale. Members are given a target income in retirement but it is not a firm promise of what someone will receive.
The previous Government began exploring the idea of CDC pensions but secondary legislation was kicked into the long grass in 2015. Now Cunningham has revived support for the idea.
He says: “This is a matter for when the Government will bring forward the regulations. What we need to do is be properly prepared to make sure the regulations offer an environment that is attractive enough for the industry to create the opportunities for CDC. It is up to the Government to drive the programme, it is up to us to hold them to account.”
He adds: “We believe in it; actuaries seem to agree it is a good idea. There are other groups who consider it a good option for people.”
Cunningham is abreast of other ongoing pensions policies and is taking the opposition lead on the establishment of a single guidance body, which will see the Money Advice Service, Pension Wise and The Pensions Advisory Service merged into one organisation.
He says: “We think it is absolutely essential the skills that are in the system already are exploited. The organisations that are good at doing these things should have a part to play in the longer term, otherwise we will end up with a telephone and internet-based system and that is not ideal for everybody.”
He adds: “We [also] want to press the Government to make sure this isn’t seen as a simple way of saving money. I don’t want to see millions of pounds taken out of the guidance services just because we have a single body.
“It is important that money is invested in delivering the structures we need to make sure we can deliver much better guidance in this country.”
Cunningham expresses frustration at policies and legislation not being progressed, for example, secondary legislation around master trusts, but says this cannot solely be blamed on Brexit.
He says: “Things are being held up and it may well be Brexit but the House is not busy, the committees are not busy. There are very few bill committees running. There have been no delegated legislative committees since the General Election in relation to the whole work and pensions area, to my knowledge.”
Cunningham says Labour is clear it wants auto-enrolment extended to the self-employed and contributions adjusted and he is also supportive of more transparency around costs and charges in financial services.
He says: “We want to continue to put pressure on the Government on the transparency agenda. We believe that some of the stuff that has come out in recent times from the FCA on transparency is a positive step forward but we have got to make sure we deliver on that transparency because that will drive better outcomes for savers.”