Global money managers operating in the U.K.'s defined contribution market are running out of time to get their strategies in line for a world where savers have more freedom than ever before.
That, along with sympathy for their plight, was the overwhelming message from a representative for the National Association of Pension Funds as well as from regulators during the NAPF's annual conference, held Oct. 15-17 in Liverpool, England.
Beginning in April 2015, defined contribution plan participants in the United Kingdom no longer will be required to purchase an annuity to fund their retirement. These changes were announced in the U.K. budget in March, and reinforced in this month's publication of the Taxation of Pensions Bill. The bill outlines legislation that will enforce changes announced by the U.K.'s Chancellor of the Exchequer, George Osborne, in the budget.
The pressure is now on DC plan providers to come up with strategies and funds to potentially fill that space.
“There's no denying that the proposition is exciting and compelling for savers,” Ruston Smith, chairman of the NAPF, said during his opening remarks. “But for those of us at the sharp end who have to deliver this, April is not far away.”
Mark Boyle, chairman of The Pensions Regulator, which regulates workplace pension arrangements in the U.K., voiced his concerns. “Even before the budget, changes were happening at great speed,” Mr. Boyle said in a speech at the conference. “DC assets are to double in the next 15 years to £800 billion ($1.3 trillion). Pension reform announced in or since the budget has created a dramatically changed landscape.”
“I'm acutely aware of the amount of change that the industry is having to deal with,” said Mr. Boyle. He also referred to the budget's requirement for a guidance guarantee for savers, with plans for every participant to receive free and impartial guidance in the run up to retirement.