A clearer picture emerges
After more than a year of debate, the latest Pension Reform White Paper clarifies a number of uncertainties that have been of concern to insurers but leaves several questions unanswered. It suggests a number of opportunities for insurers to explore, while raising critical strategic issues.
Overall level of savings will increase
The latest Pensions White Paper largely endorses the central recommendations of the Pensions Commission. Apart from significant changes in the state pension system, it proposes creation of Personal Accounts into which most employees in all companies will be auto-enrolled, unless that company seeks exemption and auto-enrols employees in an existing pension scheme.
As a result of the introduction of Personal Accounts, it is expected that the number of private sector firms contributing to employees’ pensions will rise from approximately 132,000 to close to 1 million. Deloitte estimates that the number of private sector employees in workplace pension schemes could grow by around 50% from 5-6m to 7-8m with approximately 4-5 million joining Personal Accounts. The precise mix will depend upon the number of existing schemes that either remain open to auto-enrolment or close. The additional savings of £8bn will similarly be spread between workplace pensions and Personal Accounts. Some of the £8bn is expected to be a recycling of existing savings from ISAs and other sources.
See full Press Release.
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