As the first week of 2017 draws to a close, pensions experts have predicted another year of mixed fortunes for the sector.

From the fall-out from BHS, to the launch of the new Lifetime ISA (LISA) and consolidation of master trusts, the year ahead looks to be action packed.

Lifetime ISA

Due to launch in April this year, the Lifetime ISA (LISA) gives savers the opportunity to receive a government bonus of up to £1,000 per year.

The idea is that savers will put the funds to put towards a first home or use them as a retirement fund.

Paul Waters, head of workplace savings at Hymans Roberson, said: "Lifetime ISA participation will be much higher than original estimates when it's introduced.

"Our own research estimates that 61 per cent of workers under 40 would open a LISA, and 23 per cent straight away."

Ian Bell, head of pensions at RSM, predicts although the take up will be high, the cost of the scheme is still to be clarified.

"We can expect confusion among savers with many opting to deposit spare cash in their LISA, rather than their pension," he said.

Impact of BHS

When high street retailer BHS went into administration earlier this year, it left behind a £571million pension deficit.

The impact of the high profile collapse, is likely to be felt across the pensions sector in both the short and long term.

RSM's Ian Bell said: "While we are likely to see some payment being made into the BHS pension scheme, we can also expect more action from the regulator to drive up standards of governance and trusteeship."

"We could also feasibly see moves towards a takeover code to introduce some form of clearance, focused on pension funding prior to a merger being allowed to proceed."

Jon Hatchett, head of corporate consulting at Hymans Robertson said in the wake of BHS, the Department of Work and Pensions green paper into the future of Defined Benefit (DB) schemes is likely to lead to tougher powers for the regulator.

Master Trusts

Multi-employer occupations schemes, or master trusts, are set to have a make or break year in 2017, according to Hyman's Robertson's CIO Andy Green.

Green said master trusts will either collapse or merge, as auto enrolment and intensified DC governance requirements have led to a proliferation of providers.

"We support a phased introduction to the new requirements set out in the Pensions Bill and tighter controls by the Regulator," he said.

RSM's Ian Bell added that trusts will be re-thinking their futures: "Master trusts will now be revisiting their business plans on the back of the business they have won compared to their future running costs."

"We could feasibly see the number of master trusts falling to 10 or less in the foreseeable future."

First published 06.01.2017

Lindsay.sharman@wilmingtonplc.com