The Department for Work and Pensions (DWP) should “seize the moment” over DB pensions benefit simplification, according to Royal London director of policy, Steve Webb.
In his response to the DWP’s consultation on DB benefit consolidation, Webb urged the government to bring forward legislation to make it simpler for DB schemes to streamline member benefits.
Commenting, Webb said: “We have a rare window of opportunity to do something radical that would simplify pensions for millions of people.
“With a Pensions Bill expected in this year’s Queen’s Speech, legislation could remove barriers to simplifying member benefits which would make it easier for members to understand their pension rights and cheaper for schemes and employers.”
Webb and Royal London argued that DB member benefits can be “hugely complex” and involve a number of different “tranches” that each have different rules and regulations.
In November 2018, Webb and the Association of Consulting Actuaries argued that running costs could be reduced by allowing schemes to simplify existing benefits without needing individual member consent.
It could also help members better understand the benefits they have and could mean that DB scheme consolidation into superfunds would be more efficient.
Webb added: given the current focus on the potential for DB consolidation, true consolidation would be much easier and more cost-effective if DB pension benefits could be standardised and harmonised.
“This is a rare example of a reform that could benefit members, pension schemes and employers, and I urge the DWP to seize the moment”.
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