Government ‘cooling’ on pension lifetime provider proposal ‘most welcome’ – Steve Webb

The Budget speech and supporting documents indicate that the Government is starting to cool on the idea of a ‘lifetime’ pension provider, as originally promoted in the Autumn Statement.

In the Autumn Statement speech, the Chancellor talked of consulting on a ‘legal right’ for people to divert their pension savings to a pension provider of their choice. But in the Budget paperwork, the Government now says that it is simply committed to ‘exploring’ the idea. It also says that it will only do this if it can ‘ensure’ that this will produce better outcomes.

The Red Book, at para 5.112 now says:

“The government has confirmed that it remains committed to exploring a lifetime provider model for Defined Contribution (DC) pension schemes in the long-term. The government will undertake continued analysis and engagement to ensure that this would improve outcomes for pension savers, and build on the foundations of reforms already underway, including the Value for Money Framework” (underlining added).

Commenting, Steve Webb, partner at LCP, said:

“It is welcome to hear the first signs that the Government is thinking again about the idea of breaking up the current model of workplace pensions and replacing it with a ‘lifetime provider’ model. From a heavily trailed announcement in the Autumn and talk of a new ‘legal right’, today’s Budget simply talks about ‘exploring’ the idea, and needing to be sure first that it would improve things for savers. Once we see the full consultation response, where there was overwhelming opposition from consumer groups and industry experts, it is to be hoped that this idea will now be quietly dropped”.