March 2024: Meeting writeup

The sixth regular meeting of the 191^st session of the Manchester Statistical Society saw Ms Sarah Smart, the CEO of the Pensions Regulator, provide an overview of contemporary issues relating to pensions and discussing the role of the Pensions Regulator in building people’s confidence in pensions. Ms Smart began with an overview of the Pensions Regulator, a public body, and the three main areas of focus for the Regulator: protecting savers’ money, enhancing the system, and supporting innovation in savers’ interests.

One of the challenges with the sector, in Ms Smart’s view, was the fragmented nature of pensions. There are many poorly performing schemes, which may need to be consolidated into larger and better-managed entities. Consolidation would yield another benefit: fostering the emerging super funds market, and that would, in turn, unlock capital for investment in UK companies and infrastructure projects within the UK.

Ms Smart discussed the different nature of pensions in the UK, Netherlands and Australia. Although all three countries have a predominantly defined contribution system, they are organised differently. For example, in Australia employers are required to have connections with different schemes and pay their contributions into the scheme that the employee nominates. This way, employees have active involvement and a degree of ownership of their pensions. It also allows individuals carry their pension scheme with them throughout their working lives even when they transition from one employer to another.  

There are, of course, challenges in investing people’s money in pension schemes, particularly in defined contribution plans. One risk is underfunding. Another is a lack of trust in the system which serves as a disincentive to people saving in pensions. There are also pension scams that have led to people losing lots of their savings. Finally, the Pension Regulator must be adequately funded to ensure that it is delivering on its responsibilities. These are the challenges that Ms Smart is aiming to address with the ultimate objective of building people’s confidence in pensions.