Pension reforms need to be brought forward, not put back
This is set to be a very important year for UK pensions. Even those who have little to no interest or knowledge in this sector must be aware that the reforms coming this year are, for want of a better expression, a really big deal.
They will bring around the most fundamental change that our pension system has seen for a generation and will, in theory, sweep millions of Britons into accruing pension savings for the first time.
The figures make some depressing viewing. Currently, according to the Department for Work and Pensions, just 38 per cent of eligible people in this country are saving into a pension.
To make matters even more depressing, this is at the lowest level for a decade. And it gets worse, if you can believe that.The figures show that pension coverage is in a steady decline and has been for some time. Worse still, that decline is most marked in the under-40s.
So, yes, the reforms could not come soon enough. My main worry now though is that the central message going out to the wider world about pensions is that the Government has taken its foot off the pension reform accelerator and applied it firmly to the brake.
Companies with fewer than 3,000 employees are being given extra time in which to auto-enrol their staff and those with less than 50 are being shunted right back until an unspecified date after the next election.
As hard as I try, I just cannot see why such fundamental and important reforms have had to be delayed and over a million employers have had to be given the baffling message that their staging dates are to be delayed. In my view, we should be bringing the dates forward, not putting them back.
Steve Webb, in all his wisdom, said just last month that it would be unnecessary for small firms and low- earners to seek advice over auto-enrolment. This is, to put it lightly, total nonsense.
Small firms will surely need the most help when it comes to auto-enrolment and giving advice on products is literally a tiny percentage of what IFAs can help with.
The changes that are coming this year, as I have said, will revolutionise the pension industry and make it better for everyone - advisers, employers and employees. The transition will not necessarily be an easy one and I hope the Government starts making the ride easier for us rather than rougher.
Steve Bee is managing partner at Paradigm Pensions
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