The opposition Labour party has insisted that the UK pensions regulator should be allowed to force the merger of small defined contribution (DC) funds unable to deliver low-cost pensions.
In a speech to the Birmingham Chamber of Commerce less than two weeks after the party published a detailed policy paper on pensions sponsored by the National Association of Pension Funds, shadow work and pensions secretary Liam Byrne called for the UK to learn from the Australian approach to regulating the superannuation industry. Byrne noted the government had shown "no interest" in embarking on a number of reforms his party deemed necessary, including lifting restrictions on pot transfers into NEST and an annual contribution limit that he said meant employers opted against using the fund launched to act as pension provider to employers unable to find a viable private sector option.
He said Australia's 2010 review of the superannuation system, chaired by former Australian regulator Jeremy Cooper, that introduced the MySuper default fund and mandated regular cost-based reviews of schemes offered an example of how to reform the UK's system. Byrne said Labour would argue for a legal requirement on all pension funds to "prioritise the interests of savers over shareholders" – a likely reference to contract-based arrangements, but also concerns over conflicts of interest within master trusts affiliated with a single asset manager.
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