Pension Funds and their Advisers

Foreword

The last few years have brought a period of unprecedented change to the world of pensions. and it is unlikely that the pace of change will slow down in the foreseeable future. Existing pension schemes face a rapidly shifting landscape, with dramatically changing mortality assumptions, a volatile stock market where scheme funding swings from being ‘in the black’ to highly publicised controversy over deficit, a myriad of new and
different investment strategies, and greater flexibility in scheme design. then there are governance standards, solvency standards, buyouts and of course we have on the horizon the introduction of Personal accounts in 2012.

Despite the constant changes and challenges and after years of sharp decline, workplace pension provision does seem to have entered a period of relative stability. the 2007 NAPF annual survey showed that nearly a third (31%) of private sector occupational schemes remained open to new members last year and 61% of those schemes plan to stay open either in their existing form or with some modifications. however our survey
also highlighted some of the pressures placed on schemes. For example, in order to comply with Personal accounts legislation three-quarters of schemes will have to change their scheme rules. this often means changing from an opt-in to an opt-out arrangement together with all the cost implications that it brings.

The introduction of Personal accounts is expected to bring millions of workers into saving for retirement, but it is important that existing workplace pension provision is not adversely affected. and in the meantime there is a huge job to do in restoring confidence in pensions and educating people about financial planning for their latter years.

Government, the financial services industry and employers need to work together to help people make informed choices about how and when to save and how long to work. here at naPF we believe that employers have a major role to play by providing access, information and contributions to pensions for their employees. the workplace is an effective place for people to save - administration is more efficient and there are tax
advantages for the employer and the employee. therefore, we welcome the emphasis placed by the thoresen Review on the workplace as an avenue for delivering financial advice, something we called for long and loud. we know that the workplace is an efficient and valuable resource for delivering help to those who need it most. we already have a model with a proven track record of offering advice in this way. the PENSIONSFORCE initiative began delivering face-to-face group meetings in the workplace in september 2006 and has shown us that this is an excellent way of reaching a wide audience, many of whom would otherwise be very hard to connect with. it is cost effective and it gets results. In addition to providing information and increasing awareness of the need to save for retirement, we have also been sending out the message that people need to review their financial planning during the course of their working lives and in particular when their circumstances change.

Over the coming months the pensions industry clearly has many challenges as yet more changes takes place. what is important is that change is not just for the sake of change, but to make things better.