Pension scheme trustees and sponsors split on impact of Autumn Statement on scheme strategy, XPS Pensions Group polls finds

Pension scheme trustees and sponsors split on impact of Autumn Statement on scheme strategy, XPS Pensions Group polls finds

06 Dec 2023

• Series of polls at XPS Pensions Group’s ‘PensionsTalk’ online events finds pension scheme representatives split on Autumn Statement’s impact on sector.
• Only 24% said changes announced would benefit DB and DC scheme members, with 28% answering neither would benefit and 28% responding ‘don’t know’.
• Respondents evenly split over whether the Government should pursue ‘pot for life’ proposals for DC savers.
• Significant minority of DB trustees and sponsors now considering running schemes on for surplus, but buyout remains most popular endgame strategy.

A series of polls at online events hosted by pensions consultancy XPS Pensions Group in the aftermath of the Autumn Statement has found that trustees and sponsors are split on how the proposals announced will impact their schemes and members.

In a series of events held from 27^th November to the 1^st December, a sequence of polls of scheme trustees and sponsors found that there was a variance in the degree to which the reforms announced would benefit members or impact scheme strategy.

Only 24% of respondents believed members of both DB and DC schemes would benefit from the measures announced by the Chancellor on 22 November. 28% said neither DB nor DC scheme members would see any benefit, while 28% said they didn’t know. 17% said only DC members would benefit, while only 3% said only DB members would benefit.

A significant minority (28%) of respondents are now considering running their defined benefit scheme on for surplus, following the announcements that the Chancellor made which were intended to make this a more viable option as an endgame for schemes. Research from XPS Pensions Group published earlier this year showed that running on for surplus made sense for about a fifth of schemes and could generate £100bn over 10 years to benefit members and support UK business.

Buyout remains the most popular endgame strategy, with 67% of respondents saying they would pursue that path if the Chancellor’s proposed reforms go ahead. There was limited appetite to enter into a consolidation scheme managed by the Pension Protection Fund (PPF), with only 3% of respondents identifying this as their preferred strategy if the reforms went ahead.

On the question of the proposed ‘pot for life’ proposals for DC pension savers, trustees and sponsors were evenly split on the question of whether the Government should pursue the plan, with 52% saying they should and 48% saying they shouldn’t.

Wayne Segers, Partner at XPS Pensions Group, said: “Whilst it’s not surprising that buyout remains the most popular endgame strategy for DB schemes, we are seeing more employers and trustees explore running their schemes on safely for surplus. This can have a substantial positive impact on DB members, employees’ workplace pensions and employers’ businesses.

“What we hope to see is a consultation that looks not only at appropriate funding levels and managing risk but also how legislation and regulatory guidance can properly support trustees who are being asked to manage schemes to run on for surplus.”

Sophia Singleton, Head of DC at XPS Pensions Group, said: “The Government’s pot for life proposals will involve a radical overhaul of the relationship between employers, employees and their pensions. It’s clear from our poll that just over half of scheme sponsors and trustees believe the benefits that it would have for individuals might outweigh the cost of implementation. Our poll demonstrates that we need to have a full and proper debate involving all stakeholders and we welcome DWP’s call for evidence as a starting point for this conversation.”

Notes:

Methodology

The polling referenced in this press release was carried out at a series of five online webinars which made up XPS Pensions Group’s PensionsTalk online event series. Five online events were hosted daily between 27^th November and 1^st December. Attendees of these events were pension scheme trustees, employers, and other industry professionals. A summary of the questions asked and responses received are below.

If the Autumn Statement proposals go ahead, what endgame strategy would you follow for your scheme? (n=122)

Asked: 27^th November 2023

Answer	Percentage of respondents choosing
Buyout	66.9
Superfund	1.4
Run on for surplus	28.4
PPF consolidator	3.4

 

Do you think the UK should move workplace pensions to a pot for life system as proposed by government? (n=156)

Asked: 27^th November 2023

Answer	Percentage of respondents choosing
Yes	51.7
No	48.3

 

Do you think that the Autumn Statement will ultimately benefit your DB and DC membership? (n=84)

Asked: 28^th November 2023

Answer	Percentage of respondents choosing
Yes, DC only	16.8
Yes, DB only	2.8
Yes, DB and DC	24.3
Neither	28.0
Don’t know	28.0

The research published by XPS Pensions Group earlier this year on the positive economic impacts of allowing DB schemes to run on for surplus can be accessed here.