As many return to work after the recent holidays, industry organisations have taken this chance to take stock of the pressures facing savers, with reform and review key themes over the past week.
Despite a dip in March, industry experts remained concerned about the “eye-watering” levels of inflation facing savers and pensioners, warning that this will make it even more difficult to meet future retirement goals.
Industry research also continued to raise concerns around saving trends, with analysis from Standard Life revealing that three quarters (75 per cent) of UK adults don’t know how much is in their pension pot, rising to 81 per cent amongst women.
And whilst some improvements are emerging, with research from Broadstone revealing a “sharp reversal” in gender pension gap for younger pensioners, this same research suggested that higher contributions are still needed to improve retirement standards for both men and women.
These growing concerns culminated in the launch of a new report from the Institute for Fiscal Studies (IFS), which made the case for a major review of the pension system given the “substantial risks” facing future generations of pensioners.
The multi-year review will look to examine the effects of changing economic conditions and public policies on the future of financial security in retirement, including how these effects differ by gender, ethnicity and across the UK.
Industry experts suggested that the review is “long overdue”, amid concerns that the UK could be “sleepwalking into the next pension crisis” given changes in the economic landscape.
Yet significant reforms could already be in store for specific areas of industry, as Chancellor, Jeremy Hunt, recently said that Britain’s pensions industry is in need of “big reform” to ensure that savers are getting good returns on their pension investments.
Industry research also revealed the importance of monitoring investment arrangements closely, showing that fiduciary manager’s (FM) portfolio performance varied widely throughout 2022, with a 13 per cent difference between the highest and lowest returning growth portfolios.
This has not been the only investment focus, as AGM season has also begun to ramp up, and investors are already looking to take action, with a number of UK pension schemes announcing that they plan to vote against the re-election of BP chair, Helge Lund, over concerns about changes to the group’s climate commitments.
Legal and General Investment Management (LGIM) and Christian Brothers Investment Services (CBIS) have also co-filed a shareholder resolution for ExxonMobil’s 2023 AGM, calling for greater disclosure of asset retirement obligations.
Support for investors in this area is growing though, with a coalition of eight pension investors sharing guidance for companies on how to take a ‘meaningful approach’ to including workers’ voices at board level, including the potential use of workforce directors.
