In a report published today, The Work and Pensions Committee, which was appointed by the House of Commons to examine the Department for Work and Pensions, said the commission would also examine amendments to existing legislation, such as the pension freedoms due to come into force next month.
“We recommend that the next Government take steps to establish an independent pensions commission at an early date after the general election and certainly by July 2015,” it said.
“If the new Government does not accept that a new pensions commission is required, it will need to tackle the range of issues raised in this report itself, as a matter of urgency.”
The committee said the commission should consist of a chair and two or three members but involve a “wide range” of stakeholders including the pensions industry, pension experts, and consumer representatives.
Additionally, the commission would aim to address a “lack of engagement” between the general public and the complexities of retirement savings.
The Government has previously been criticised for failing to adequately prepare the public for the upcoming pension freedoms, which remove the need for an annuity by allowing 100% lump sum withdraw from pension pots.
Commentators have criticised the Government’s plan to fund the “guidance guarantee”, a free pensions advice service for those approaching retirement, using a levy on advisers for being “unfair” and have doubted the impartiality of using pension providers to issue advice.
Among the other measures in today’s report are a review into the effectiveness of auto-enrolment, the system by which all eligible employees must be automatically enrolled into their company pension, and a review into raising the minimum age to five years below a state pension.
Valuable contribution
Jonathan Lipkin, director of public policy at The Investment Association, the representative body for UK investment managers, said an independent commission to review pension reform progress to date could make a “valuable contribution” to future decisions regarding their regulatory structure.
“The Budget freedoms create significant responsibilities for the financial services industry, Government and regulators in terms of ensuring both appropriate product innovation and consumer protection,” he added.
David Sinclair, director of the International Longevity Centre, a UK think-tank on longevity and demographic change, also welcomed the call for an independent commission, claiming it would help the UK out of its current “savings crisis”.
“It is critical that whatever future steps are taken [in the pensions industry] are well thought through, based on consultation, with a variety of stakeholders and are appropriately communicated to the general public,” he added.
Jon Greer, pensions technical expert at Old Mutual Wealth, said: “The last two years have seen unprecedented change in pensions and the industry has done well to keep up.
“An independent commission with the ability to oversee pension policy regardless of which flavour Government is in place can play a valuable role in creating a period of much needed stability, enabling the reforms to bed in before any future changes.”
