Which? response to the DWP and HMT Pensions Investment Review: Unlocking the UK Pensions markets for growth consultation

Summary

Which? welcomes the opportunity to respond to this consultation. We support the principles of delivering scale, assisting consolidation and a focus on ensuring that consumers receive good value from their pension savings.

• We agree that a defined contributions (DC) pensions market with fewer, larger pension providers could help ensure better long-term returns for savers whilst keeping costs low.
• Scale and consolidation among larger schemes could help achieve more investment in productive assets, and improve a schemes’ ability to negotiate lower investment fees, for example NEST’s default strategy allocates assets to investments such as UK property, private credit, infrastructure equity and private equity, while successfully using its negotiating position as a large master trust to drive down average charges to below 0.3%.
• It is also more likely that the providers in the market would be able to provide a range of decumulation services, as are expected to be required in the upcoming Pensions Bill.
• While we are supportive of the general principles of the consultation as stated above we have significant concerns regarding the potential outcomes for consumers if providers have the ability to transfer savers to a new contract based arrangement without their consent in the ways that are proposed within the consultation.