It’s that time of year, when Business Link Magazine invites the region’s business leaders to offer up their predictions for the year ahead.
It has become something of a tradition, given that we’ve been doing this now for over 30 years.
In this ‘Year of Elections’ both in the UK and across the world, there was much to affect markets, change views and to give increased reason for thought in the UK pensions industry. As the final weeks of 2024 approach, Matthew Arends, partner and head of UK retirement policy at Aon, which has offices across Yorkshire, looks ahead to what will be concentrating minds in 2025.
2024 saw the UK pensions landscape continue to evolve and there is no sign of that changing as we approach 2025. Improvements in defined benefit (DB) pension scheme funding mean that, for many, the ‘endgame’ for the pension scheme now feels tangible, instead of a distant ambition. However, the advent of the new funding regime will overlay a new discipline. With defined contribution (DC) schemes, questions around adequacy remain uppermost for members, while the absence of a timetable for the extension of auto-enrolment minimum contributions continues to be a concern.
We now know that Employer National Insurance Contributions and minimum wage changes in April 2025 will increase the cost of employing staff. One casualty of that could be employer pension contributions above the auto-enrolment minimum, meaning less saved into pensions. And yet we know that DC savers are already generally not saving enough for adequate retirements, meaning that there is a real risk of retirement adequacy declining. There may be solutions on the horizon, but while multi-employer CDC schemes – which have the potential to deliver better average member outcomes – have taken a big step forward in 2024, their widespread implementation remains in the future.
