Pension Reforms Need More Transparency
The Society of Pension Professionals (SPP) is calling for fairness and transparency in the Government’s reforms of the General Levy, which funds regulatory bodies such as The Pensions Regulator and The Pensions Ombudsman. While the SPP supports the objective of putting the General Levy on a sustainable footing, it has raised concerns over proposed steep increases for master trusts and personal pension providers.
Key highlights of the SPP’s consultation response include a lack of evidence for differential rises, with the SPP questioning the rationale for placing the largest levy increases on master trusts and personal pension providers without clear evidence that they generate a higher regulatory burden.
The SPP states that additional levy costs arrive alongside an unprecedented wave of government-led reforms, including Pensions Dashboards, Value for Money (VfM) assessments, small pots consolidation, decumulation, and market consolidation, which compounds financial pressures on the sector. They are calling on the Government to provide clear, evidence-based justification for these rises.
A pension scheme’s ability to absorb these costs is important, and the SPP recommends that the Government consider the cumulative impact of these reforms on the sector, particularly in relation to pension management.
To build industry confidence, the SPP recommends unified, consolidated reporting across all levy-funded bodies to clearly demonstrate cost drivers, efficiency, and value for money. The SPP advocates for a future framework built on fairness, stability, and proportionality, which will help the pension sector.
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The SPP suggests exploring a split-charging structure, such as retaining per-member fees for guidance/ombudsman services while aligning regulatory costs with Assets Under Management, as the market continues to consolidate. This approach could help ensure that the levy is fair and proportionate, and that pension schemes can operate efficiently.
As the pension sector continues to evolve, the Government will need to balance the need for regulatory funding with the need for industry affordability. The SPP’s recommendation to introduce consolidated reporting across all levy-funded bodies could help provide the transparency and accountability that pension schemes, and ultimately savers, deserve.
Madalena Cain, Deputy Chair of the SPP’s DC Committee, said: “The SPP fully supports steps to ensure our regulatory bodies are adequately funded in order to protect savers. However, any changes to the General Levy must be fair, proportionate, and transparent. Given the huge cumulative cost of ongoing government reforms, the government must ensure levies are carefully balanced with industry affordability.”
The SPP’s call for fairness and transparency in the General Levy reforms reflects the need for a balanced approach that takes into account the interests of both regulatory bodies and the pension sector. Any changes to the General Levy must be carefully considered and evidence-based.
