Government sets out scope of first phase of Pensions Review

The government has published its terms of reference confirming the scope of the first phase of the planned Pensions Review.

Overseen by pensions minister Emma Reynolds, the review’s remit has four core areas: consolidating defined contribution (DC) schemes, tackling “fragmentation and inefficiency” in the Local Government Pension Scheme, delivering value and better outcomes in retirement, and encouraging investment in UK assets.

“Phase one” of the Pensions Review will also consider how to boost investment returns for DC savers, as well as fiscal impacts and support for the Gilts market.

The Pensions Review – widely expected since Labour set out a financial services sector policy in February – was unveiled last month by chancellor Rachel Reeves.

The wide scope of the review was welcomed by the industry, but many warned that there was a challenging balance to strike between encouraging UK investment and securing better outcomes for members.

The three departments overseeing the review – the Treasury, the Department for Work and Pensions and the Ministry of Housing, Communities & Local Government – will seek to engage with “a wide range of external viewpoints”. These include employers, trade unions, the pensions and wider financial services industries, local government bodies and consumers.

“Co-creation with industry and the Local Government Pension Scheme will be an essential part of the review process, as will expertise from leading voices and think-tanks,” the departments stated in the terms of reference.

Initial findings are scheduled to be reported later this year ahead of the expected drafting of a Pension Schemes Bill.

The second “phase” of the review will also start later this year, the government said, and will “consider further steps to improve pension outcomes, including assessing retirement adequacy”.

Policy work affecting private sector defined benefit schemes is to continue separately from the review.

Earlier this week, the Pensions and Lifetime Savings Association set out a list of recommendations for making UK assets more investable for pension schemes. These included reforms to the planning process and the provision of certainty over public and private sector financing expectations and commitments.

Jamie Jenkins, director of policy at Royal London, said: “There is a clear statement about how this must focus on the broader value delivered to savers, rather than just cost. It’s imperative that people’s retirement outcomes form the cornerstone of any proposals that emerge.”