PensionBee, a leading, UK-based global online pension provider, has responded to the Department for Work and Pensions' (DWP) Pension Investment Review, emphasising the importance of keeping savers’ best interests at the forefront of any potential changes in the pensions market.

Encouraging a balanced approach to consolidation

PensionBee believes that consolidation in the Defined Contribution (DC) market may offer many advantages, including simplified regulation and reduced costs for savers. However, it cautions that consolidation does not guarantee higher returns for savers, and the focus should be on creating conditions that enable diversified investment strategies, rather than relying solely on size.

Streamlining regulation to encourage diversified investment strategies including UK productive assets

In response to questions about the future role of Master Trusts and Group Personal Pensions (GPPs), PensionBee advocates for regulatory simplification, suggesting that all schemes should operate under a single regulator.

This would help steer schemes towards new diversified investment strategies with exposure to UK productive assets, provided there are clear incentives or requirements in place. PensionBee is calling for the government to consider tax relief as a powerful incentive for increased investment in UK productive assets, without compromising returns for savers.

Addressing barriers to consolidation

PensionBee acknowledges that commercial and regulatory barriers to consolidation still exist, particularly with legacy books and legal complexities. However, the company remains of the view that any such efforts should prioritise savers' rights and returns and ensure that individuals are not disadvantaged by changes in their pension scheme and is calling on the government to provide a protective backstop to ensure savers are protected, particularly when investing in higher-risk and less liquid asset classes.

Becky O’Connor, Director (VP) Public Affairs at PensionBee, commented: "It is crucial that any changes prioritise savers’ best interests. While consolidation offers potential benefits like reduced costs and regulatory simplicity, it is not a silver bullet for stronger returns, but it can facilitate the expertise needed to drive an expansion into more complex asset classes.

"We urge the Government to focus on fostering a diverse investment landscape that balances innovation with protection, ensuring savers' rights are upheld at every step. A unified regulatory approach, the offering of incentives like tax relief and the development of innovative solutions to solve the problem of asset class illiquidity, could unlock new investment in UK productive assets, while safeguarding long-term growth and security for savers."