11.29: After committee chair and Labour MP Anne Begg elicitis another confirmation from Webb there will be no more delays to the roll out of auto-enrolment, the session ends.
11.25: The minister says he was disappointed the majority of responses to the consultation on early access were negative. He tells MP’s he has “sympathy” with the idea young people should be able to get hold of their money to help fund a deposit on a house. He says: “If it emerges that people says they are opting out because they cannot get the money we will look at it again.”
11.22: Webb says trying to get people on medium earnings beyond the minimum contribution level is necessary: “8 per cent is a minimum and we should encourage people to go further.”
11.20: Webb on auto-enrolment and IFAs: “Advice websites will sign-post people to an IFA because they have to but apart from for the odd benevolent IFA the charge on small contributions will not be worth having.”
11.15: Webb responds to question from Conservative MP Harriett Baldwin asking what he will do if 50 per cent of people opt out of auto-enrolment in comparison to the DWP projection that 65 per cent will stay in. “If half of people opt out I will think the glass is half full and of course, I will be back,” he says. He adds: “For some people it will not make sense to save, we do not want 100 per cent sign up.”
11.10: Committee member and Liberal Democrat MP Stephen Lloyd says he would be “concerned” if The Pensions Regulator was folded into the FSA and asks whether Webb will “fight tooth and nail” to stop it.
Webb says it is not a “live issue” for him. He says it is “not self-evident” having one pensions regulator would be better than having two. “The FSA is just about to be split up and I think there is a case I think for some stability,” he says, adding “you need to know what problem you are trying to solve and I am not sure there is one”.
11.05: Conservative MP and committee member Brandon Lewis tells Money Marketing from the session:
“I was pleased to see how focused and indeed determined the minister is about transparency of charges, not just for auto-enrolment. Also the full understanding of the opportunities for auto-enrolment to benefit the wider pension market in terms of charges and transparency. It is a clear message to industry to sort the code of practice or Government will do it for them.
“It is also clear that DWP is very focused on the education of the population about the scheme and what it means in good time for implementation.”
Webb tells the committee that if firms do not follow the rules they can be forced to make-up missed payments and be fined.
11.00: Webb rebuffs a question about whether firms will level down existing pensions saying that reducing existing employee rights is not an easy thing to do. “We saw that with public sector pensions,” he says. He adds that people coming into pensions as a result of auto-enrolment will be saving more than in the past and that employees often have to wait for up to two years before they are eligible for a firms pensions. “Companies are likely to use it as part of a progression and tell employees to stay with us and you will go into the better scheme.”
10.50: Aegon regulatory strategy manager Kate Smith on new staging dates (see 10am):
“Increasing the number of staging dates is a welcome move which should reduce the operational strain on industry resources. This could make a big difference to how easy employers find it to get any help they need and hopefully make the auto-enrolment process a more pleasant experience for them and their employees.”
10.40: Webb says he does not want smaller firms “agonising” over getting advice on which scheme to get because many of the vanilla ones will be similar. He says they will be able to get generic advice which will be available on The Pensions Regulator’s website, adding that larger firms will be able to afford employee benefit consultants.
10.30: Money Marketing’s pensions reporter Tom Selby has digested the statement outlining the new staging dates for auto-enrolment here.
10.30: Webb admits smallest firms face the biggest proportionate burden from auto-enrolment but adds having Nest as a default option is all about trying to help keep those costs down. He also defends level of awareness saying while it is low among smaller firms, it is far higher among the bigger firms coming in first.
10.25: Labour MP Glenda Jackson asks Webb if the restrictions on Nest can be removed as the economy improves and people are likely to want to put more into their pensions. He says: “If lower paid people bump up against the cap I will have a party, but we can remove them without primary legislation.”
10.20: The minister seeks to squash speculation about the removal of restrictions on Nest after saying he was “reflecting” on their role in the light of unexpected competition. “It turned out to be a stronger verb than I expected. I eagerly await the recommendations of the committee on this issue,” he says.
10.10: Webb on restrictions: “Nest is viable with the constraints but clearly take them off, it will do better, it will get more business and the loan will be paid back quicker. But its success does not depend on taking the restrictions off.”
He describes David Pitt Watson’s claim that removing the restrictions will cut the loan by £100m as “courageous”.
10.05: Webb does not anticipate a delay in the review of auto-enrolment,currently set out in law for 2017. He says: “By then it will clear what is happening to the market and opt out rates, five years through will be good enough.”
10.02: Webb tells MPs NAPF work on pensions transparency is welcome and should bring fall in charges for vanilla products, adding higher charges for more exotic products is acceptable. He refuses to set an “artificial deadline” to see results but says if nothing emerges over the course of auto-enrolment the Government will take action.
10.00: The ministerial statement is available here.
Webb confirms that auto-enrolment will start from October, and will apply to all employers. Under the revised time line all employers with an existing staging date of on or before February 1, 2014, are unaffected. Medium sized employers will be given new auto-enrolment dates between April 1, 2014 and April 1, 2015, pushing back the implementation dates for some medium sized employers by up to nine months.
Webb says this will mean around 70 per cent of eligible workers will be automatically enrolled before the end of this Parliament compared to around 75 per cent under the previous arrangements. Small employers will be allocated auto-enrolment dates between June 1, 2015 and April 1, 2017.
9.50: Webb tells MPs there should not be a problem with charges with auto-enrolment in the early stages as the biggest firms should get good deals on prices. “If they cannot get a good deal we might as well all give up,” he says. He warns the industry that “if it does not get its game together” he will deploy a cap but says choosing what to gap given the number and variety of charges will need to be thought about.
9.40: Webb tells committee has laid a ministerial statement before the house with details of the new timetable for auto-enrolment. Will post a link when we get it. He says there will be no more delays to auto-enrolment: “This is it, this is what will happen.”
9.25: Pensions minister Steve Webb is about to be grilled by the work and pensions select committee as part of its inquiry into auto-enrolment. You can watch it live here. So, what is likely to come up?
Labour leader Ed Miliband aligned himself with Webb recently wielding the threat of capping fees if they did not fall. A phalanx of Labour MPs, and a few from other parties, have signed a Parliamentary motion calling for urgent action to bring them down. Even though Conservative committee member Brandon Lewis was not among them, and he does not believe in a cap, he and other members are concerned they are too high, so that is likely to be one line of questioning.
An announcement from Webb’s department on the new timetable for the auto-enrolment of workers at smaller companies is expected in the next few days. The committee is likely to push him on the effect this delay will have on the programme and possibly for some detail on it.
There is also the issue of the restrictions placed on the Government backed National Employment Savings Trust. After telling MPs on Monday he was “reflecting” on the role of a ban on transfers in and out of Nest and a cap on contributions is necessary in the light of unexpected competition, Webb is likely to be asked to expand on this. Providers have warned removing them too early would be anti-competitive given the loan from Government loan used to get the scheme going.
The committee may also stray off its inquiry’s brief and ask what has happened to reform of the state pension which Labour claims has been sunk, a promised bonfire of occupational pension regulations or wider questions about switching the indexation of pensions from RPI to CPI. If that comes up he is likely to take a swipe at Labour for its opposition to the move after it emerged this week it is doing exactly that with its pensions.