New SPP president aims for DC results – law and regulation

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Hitchiner, partner of Barnett Waddingham, will replace Isio partner James Riley as SPP president on June 1.

In an exclusive interview with Pensions Expert, Hitchiner laid out his ambitions for his presidency, while Riley reflected on the organization’s increasing membership engagement and missed potential for collaboration between the SPP, industry and government.

There’s always going to be that tension between a minister who has a political agenda and an industry that sees the implementation issues, the really detailed things that the minister doesn’t necessarily care about

Steve Hitchiner, SPP

The SPP is not trying to change policy

The SPP describes itself as a “representative body for a wide range of pension advisors and service providers”.

The organization has spoken out on a range of policy issues this year. Pensions Secretary Guy Opperman recently asked for input from industry on areas such as value for money and collective defined contribution schemes, noting in March that the industry lacked a long-term vision.

The SPP has expressed concern about parts of the government’s agenda this year, including the implementation of the pensions dashboard initiative.

She recently described the government’s proposals to encourage DC investment in illiquid assets as “too complex”.

In March, meanwhile, the SPP said it had concerns about “potential unintended consequences” related to the Pensions Regulator’s code of practice for authorizing and overseeing CDC schemes, arguing that “the requirements, and therefore the costs, of the code of practice are significant.” too expensive”.

However, Hitchiner (pictured) wanted to stress that the SPP is not a lobbying organization.

“We don’t see our role as changing policy as such, our role is to influence policy implementation,” he said.

“It’s a subtle difference, but a pretty important one. Our role is to make sure the policy is of good quality.”

Dashboards risk remains

Hitchiner stressed the importance of being able to help the government, which he said does not always have to be done through consultation in practice.

“There’s always going to be this tension between a minister who has a political agenda and an industry that sees the implementation issues, the really detailed things that the minister doesn’t necessarily care about,” he said.

“You will always have this imbalance, it is the minister’s job to get things done.

“It is also necessary to occasionally speak out constructively, as we have done with dashboards, for example,” he added, citing concerns about the timeline for implementing the initiative.

The government anticipates that large systems will begin connecting to the dashboards’ digital architecture from April 2023, with a connection deadline for the first cohort – the largest Master Trusts – at the end of June 2023.

“We strongly support the concept of the dashboard. His delivery will be very complicated, I think everyone realizes that,” Hitchiner said.

“It is very important that the industry gets enough clarity and time to bring things up.

“Certainly earlier in the year we had some concerns about clarity and timings…there’s still a risk in delivering something this complicated, so I think we still have some concerns, but it’s important that we address that.” work constructively with regulators,” he continued.

“There’s no point in just worrying about something, we have to make positive suggestions on how to move forward.”

SPP and industry could have done more with the government

Outgoing President Riley (pictured below) has observed a growing desire among panel members to get involved during his tenure.

However, he bemoaned that, with the exception of the Dashboard initiative, both the SPP and industry could have achieved more with the government during his presidency.

James Riley

“If we’re very open, could we as an industry have had more leverage with government?” he mused.

“We have responded to a great many consultations, discussed a great many issues with the government and I’m not sure that we as an industry, but also as an SPP, have been as influential as I would have liked.”

Hitchiner was keen to highlight the range of developments in the area of ​​defined benefits, including the new funding and governance codes, climate-related disclosures and the potential launch of more DB superfunds.

However, he noted that there needs to be a greater focus on outcomes for DC members.

“As an industry, I worry that there’s a little too much focus on DB run-off and not enough on results for DC members,” he said.

“That’s going to be a real focus for both me and the SPP in general I think for years to come as I look at these DC results.

“We have a large generation of people – almost like the first generation of ‘DCers’ – who are slowly retiring and we have to make sure the system works for them,” he added.

CDC required for decumulation

The new SPP president called for giving DC members more options when they retire.

These could include variants of CDC schemes. Royal Mail will be the first UK organization to launch its own CDC scheme.

“Right now, if you’re a member of a DC system and approaching retirement, you have a very binary choice — two pretty extreme options,” Hitchiner said.

“First, it’s basically guaranteeing everything, and that takes quite a bit of effort. Or the alternative is to go on your own and take all the risk yourself.

“In fact, there’s quite a wide range of options that we could offer our members, and I guess you could hide all of that under the guise of CDC,” he continued.

“The problem is that I think Royal Mail-style CDC programs are only ever good for a very small sector and do nothing for this group of DC members who are about to retire.

“We need more options for them — multi-employer CDC agreements, possibly decumulation-only CDC agreements.”

But Hitchiner insisted that the introduction of CDC was “extremely important”, even if CDC programs developed for companies like Royal Mail are only suitable for very large employers.

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“That’s just the starting point, and that gives us the building blocks to then build other types of options that can reach more people — particularly multi-employer CDC agreements that only provide a decumulation option, and that will then reach the entire.” group of existing members of the DC system,” he added.

Riley said the legislature time spent creating CDC vehicles would only have been worth it “if we got CDC to decumulate,” a point Hitchiner agreed with.

“My personal opinion is if we don’t do it, it wasn’t. We’ve created a niche vehicle,” said Riley.

“But if we get CDC to decumulate, all that hard work … it doesn’t matter that Royal Mail went first, if we get there we’ve gained valuable ground.”

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