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The UK government has been urged to rethink its lifetime provider model proposal for pension savers.
The call was made by the Society of Pension Professionals (SPP). The group, which represents a wide range of providers of pensions advice and services to schemes, trustees and employers, said the model would be “complex and costly”.
It said alternatives such as the government’s pension dashboards project “could more effectively solve the small pension pots problem”.
The lifetime provider model (LPM) or “pot for life” is a structure whereby savers have a single pension scheme throughout their lives irrespective of how many jobs they may have.
Last November, the chancellor announced in his Autumn Statement that he would give workers the right to decide on the scheme their employer pays their contributions to.
The Department for Work and Pensions (DWP) has already launched a consultation on LPM, seeking views on whether a single lifetime provider model would improve outcomes for Defined Contribution (DC) pension savers compared to current workplace arrangements.
In this year’s Spring Budget, the government stated that it is “committed to exploring a lifetime provider model.”
However, the SPP wants the government to think again on the LPM scheme and has published its analysis of government plans.
The paper examines the existing pensions landscape in the UK, employer governance, whether a Lifetime Provider Model will improve member (saver) outcomes and the legislative and legal considerations of introducing this new system.
Steve Hitchiner, president of the SPP, said: “SPP’s latest discussion paper has clearly set out a number of sizeable challenges and downsides to a Lifetime Provider Model. In our view, there are more effective alternatives, most notably a fully operational pensions dashboard system, that would be a far better use of resources.
“As well as making any requirement for a LPM largely redundant, concentrating on other pensions policies that are already in motion increases the chances of those policies succeeding; a genuine win-win solution.”
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