Building on auto-enrolment’s success and fine tuning the pensions dashboard are high on the list
As I write my first Money Marketing column of the year, it has given me an opportunity to look back on what the Government has done to transform pensions and savings for people since 2010.
Five years on from the launch of automatic enrolment, our review published in December confirmed a decade of decline in saving has been reversed, with nine million more people enrolled into a workplace pension through one million employers across the UK as of earlier this month. This makes auto-enrolment one of the great social reforms put into place since the turn of the millennium.
Last year also saw us review the state pension age to reflect increasing life expectancy, end unfair charges and maintain the momentum of auto-enrolment by opening pension saving to younger people, lower earners and multiple job holders.
But we need to continue our long-term approach to helping people engage, save and plan ahead for later life through pension saving.
The Government must work closely with the industry, employers and regulators to ensure reforms can be introduced in a way they are prepared for. We will continue to put the consumer at the heart of every decision we make in 2018.
For instance, it is important we also look to address the problem of the 4.8 million self-employed people under-saving for their retirement.
There is no simple answer that will meet the diverse needs of this increasing group of people, but beginning with the launch of targeted interventions this year, including through the tax return process, we will look to find simple and efficient ways to support people to save, and will be working with industry stakeholders to achieve this.
Our auto-enrolment review outlines a clear direction of travel to build on its success, and we will work to deliver detailed design and implementation plans. We must ensure that, going into the mid-2020s, our reforms run smoothly for everyone.
In the meantime, the challenge is that, with a policy so successfully based on inertia, low levels of consumer engagement mean trust and confidence cannot be taken for granted.
With contribution rates increasing in April, and a year later in 2019, we must work closely with businesses to ensure they are prepared and ready to engage consumers on the continued benefits of saving into a workplace pension.
Auto-enrolment has clearly energised workplace pensions, but we want to go much further by using digital innovation. That is why this year will be a defining one for the pensions dashboard: the single most exciting savings and pensions innovation this country has seen for many years.
The dashboard can be just as radical as the transformation we have seen in travel, insurance and a host of other sectors that have gone online.
My department will drive forward this project, with a commitment to working closely with the pensions industry, consumer groups and regulators. This is crucial, as every step we take must be with consumer interests at the heart of this innovation. We will shortly be publishing a feasibility study to set out what the future holds, as we look to launch in 2019.
In addition to this, I am hugely passionate about the benefits of the Single Financial Guidance Body. The new body will provide the opportunity to look at the full picture of people’s finance needs, and develop journeys for financial guidance throughout their lives.
My aim is to help people prepare and save for their future. While I am honoured to be the minister responsible, it is not a challenge I can address alone. That is why I will work alongside you, employers, savers and the media to ensure that when people reach the crossroads of retirement, it is a journey they can look forward to.
Guy Opperman is the minister for pensions and financial inclusion