Pensions Roadmap brings greater clarity on DB reform, consolidation and retirement solutions

Today the DWP published a new roadmap detailing the timeline of DB and DC reforms set out in the Pension Schemes Act.

Jon Forsyth, Head of Pensions Developments LCP, commented: “Today’s roadmap is a welcome step for DB pensions. As funding positions improve, the focus is shifting from managing deficits to making the most of new opportunities on surplus, endgame strategy and scheme flexibility. The clarity on direction and timescales is positive; the priority now should be timely and effective implementation, engaging constructively with industry along the way.”

Superfund regulations

On superfunds, Laura Amin, Head of DB Consolidation, said: “It is disappointing to see the delay to the draft superfund regulations to early next year. While in practice the interim regime remains in place and continues to support superfund transactions today, this delay will likely be frustrating to potential new superfund market entrants which may be looking for the formal legislative framework to be in place to secure further investment.”

“That said, the government’s commitment to putting the superfund regime on a statutory footing is unchanged, with implementation of the formal legal framework still expected in 2028.

“More importantly, confidence and momentum in the superfund market continue to build. With Clara expected to announce further transactions over the next few months and with the TPT superfund now in TPR assessment, we are seeing growing evidence that trustees and sponsors are becoming increasingly comfortable with superfunds as a potential endgame solution in the right circumstances.”

Value for Money framework

On the Value For Money framework, Helen Shackelford LCP Partner commented: “We welcome the decision to revise the delivery approach for the new Value for Money framework. It is important to strike the right balance between making timely progress and ensuring the framework is sufficiently developed to avoid unintended consequences across the DC pensions market.

“While we support the objective of improving outcomes for members, it is essential that the framework is proportionate, evidence-based and workable in practice. The new consultation on the topic continues to finesse the framework and it is positive to see a number of simplifications being made, in response to LCP and industry pressure.

“Whilst it is positive that automatic consequences of the outcomes of assessments will not be applied in the first year, if those results are published they will still impact providers, schemes and the industry as whole. The Government’s broader policy direction is already clearly focused on consolidation, supported by a range of existing initiatives. The VFM framework should focus on transparency and better member outcomes, rather than acting as an additional mechanism to force consolidation.”

Guided Retirement in DC pensions

Lydia Fearn, Head of DC Consolidation at LCP, added: “Today’s updated roadmap gives the market more perspective on sequencing, but it also confirms that Guided Retirement may take longer to arrive for some. That matters, because retirement support is not a side issue in DC, it is central to whether the system is delivering good outcomes for savers.

“The government is clearly trying to join up several big moving parts: value for money, consolidation, scale, contractual override and the development of Retirement CDC. There is logic in that, and it is sensible to want a framework that is workable in practice rather than rushed.

“But the trade-off is that members may have to wait longer for the kind of default retirement solutions that could help them navigate complex decisions with more confidence. The key now is to make sure this revised timetable leads to better implementation, not simply slower progress.”