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The new pensions minister – in his own words

Harrington-Richard 620

After what feels like a whirlwind of change here in Westminster, I am delighted to be speaking to Money Marketing readers as the new Minister for Pensions.

I want to take this opportunity to speak with the pensions industry early on and let you know how committed I am to continuing the delivery of our key reforms. We have already achieved a huge amount and there is now a real platform to build upon.

I want people to enjoy a more financially secure retirement, and my task now is to continue the pensions revolution and ensure the changes we have made over the last year set people on the right path for their later years – whether that is through automatic enrolment, the new state pension or providing additional protections for those enrolled in master trusts in the upcoming Pensions Bill.

I recognise that I am taking the reins just after the historic decision to leave the EU, which created some uncertainty in the markets. Some people are understandably concerned about their pensions.

However, it is important that we put things in context. The country is in a great position. A couple of weeks ago we saw that the UK has a record employment rate and there are more people in work than at any other point in our history. This is fantastic news and shows the strength of our economy.

People certainly should not be dissuaded from saving. Pensions are a long game and it is more important than ever that people are saving regularly throughout their career. People are living longer and by the mid-2030s, the over 50s will comprise half the adult population in the UK. This is great news and all the more reason to start planning early on for a longer retirement.

At the moment, many young people think pensions are so far away as to be irrelevant; we must try and change that perception. It is astonishing, but true, that someone who starts saving at the age of 21 and then stops at 30 will end up with a bigger pension pot than someone who starts saving at 30 and puts aside money for the next 40 years. We need to get that message out there – the sooner people start saving, the better.

Sensible decisions taken now really will pay off in the long run and the best option for the majority of young people is to save into a workplace pension. Therefore one of my biggest priorities is to ensure the continued successful delivery of auto-enrolment.

Auto-enrolment is the cornerstone of our private pension reforms, creating a culture of saving and reversing the decade-long decline in pension savings. In fact, over 6.4m people are now either newly saving or saving more into workplace pensions as a result of its rollout.

Figures released earlier this month highlight that the momentum created through auto-enrolment continues – last month over 28,000 new employers signed up, which represents a 20 per cent increase and the largest amount of employers doing so in one month since the policy was introduced.

However, we are still only a fraction of the way through, with the most challenging phase upon us – ensuring our smallest employers set up pension schemes in the next couple of years. By 2019 minimum contributions will rise to 8 per cent, which is quadruple the current level. I understand this will pose further challenges but we are ready to help employers adjust to the changes.

I myself am a former business owner. I know the pressures of taking an idea, setting up a business, investing your life and savings into it, and dealing with the challenges that it can bring. We must help employers feel in control and ensure they have the tools they need to fulfil their auto-enrolment duties.

In 2017 there will be a review of auto-enrolment. This will be an important step in planning the future for this vital programme and I intend to use the opportunity to consider broadly how best to build on the success so far and to increase the amount people are saving. Speaking with employers and employees will be a big part of this.

There are other key priorities which I will focus on, particularly the continued delivery of the new state pension and bringing through the 2017 Pensions Bill. Having successfully delivered changes to the new state pension and to private pensions it is right that we now turn our attention to tightening up regulations on master trusts to better protect savers, improving the guidance available, and protecting people from excessive exit fees.

I look forward to working with the Treasury on the radical pension freedoms which were introduced last year. In particular I will be keeping a close eye on the hugely popular Pension Wise so that we are doing even more to provide personalised support and tailored guidance for people over 50. There is a real need for the free and impartial service it offers.

I also look forward to working closely with both The Pensions Regulator and the Pension Protection Fund. We have seen high-profile employer pension schemes going under recently and I want to reassure people that most funds are being managed perfectly well and where there is a scheme deficit, robust recovery plans are in place which spread the cost over time.

As Pensions Minister my role is to ensure that pensions is at the top of this Government’s agenda. I am absolutely committed to this. The pensions industry has already done a fantastic job to get us to this point and I see my role very much to ensure our plans stay on track. I look forward to working with you all.

Richard Harrington is pensions minister

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Comments

There are 19 comments at the moment, we would love to hear your opinion too.

  1. Nicely said Mr Harrington, I hope you do well, we need a strong Pensions Minister to combat the historic failure of the Life Companies to treat Clients fairly. You could talk to HMRC / The Treasury about two current issues; a) MVR’s (34%+ at age 59 with 6 months to retirement?) & b) Protected Tax Free cash whereby if a sole member wants to transfer out of an old plan to take advantage of the new pension freedom rules, they will lose their Protected tax free cash benefit. Another TFC transfer amnesty would be a good idea, please Thank you for reading this.

  2. The astonishing result of compound interest given assumes returns more than 7.5% ahead of salary growth. Use of such returns for forward planning are like to result in disappointment and are irresponsible to promote.

  3. Please address the issue of us women born in the 1950s who have had 2 rises in our state pension age with little or no notification. We have worked all our lives and have now had the goalposts moved at the last minute. We need transitional arrangements put in place ASAP. The record employment rate is due to us having to work an extra 6 years, we are blocking jobs for young people. I sincerely hope you will try to help us.

  4. “We have already achieved a huge amount” might better be stated as “We’ve already done even more damage to public confidence in pensions by our unceasing programme of making everything ever more complicated and restrictive (except for the Pension Freedoms which, if I’m being honest, has only really encouraged a lot of people who absolutely shouldn’t to cash in their inadequate pension funds).” Bozo.

  5. Pensions are a long game – women born in the 50’s were promised a pension at 60 – that didn’t happen the 1995 bill changed it to equalise at 65. Only not many knew about it until 2011 when another bill was introduced to speed up that change and increase it to 66. One minute you had to work 30 years for a full pension now it’s 35. I won’t get the full state pension because I was contracted out for a few years – my contracted out pension alone won’t pay For everything but I had no choice – I wanted to contract back in but it wasn’t an option.
    I saved a small amount in another private pension when I was 17-27 yrs old .. I knew pensions saving was a ‘sensible decision’ that would pay off in the long run – only it didn’t .. My little pension did not grow big enough to be of much use when I withdrew it a few years ago but I was not dissuaded from saving. Now savings are at record lows and pensions are now an even longer game because an extra 6 years has been added on at short notice. I’ll just have to save harder!
    Auto enrolment is killing off small business too – it is yet another piece of red tape tying up small business and just adds to the reasons not to own one. It’s different for all the big corporations they can pay less tax so no big deal.
    Me?
    I’ve already disbanded my little company and I’ll be existing on a very small pension till I get to 66 in 4 years time. I can grow my own veg and skin a grape proficiently – at least I’ll be healthy if not wealthy!
    As to living longer – I don’t see any change, take a trip to the graveyard – not many 100+ there is there? Not that anyone would want to live that long when you see the problems that go with it!

  6. I am sure all in the industry wish the new pension minister well.
    It is a bit worrying however that an increase in employers signing up to ae is heralded as a triumph of the policy. He does know why that increase occurred right?

    I also look forward to more detail on how he proposes to help ’employers adjust the changes’ in ae contribution rates.

  7. saving 8% in a pension is meaningless when people are paying half their income in rent and average student debt is £45k

  8. You would think that I, like many other pensioners, having paid into the system with my contributions to the National Insurance Fund from my youth to retirement would be reasonably happy with my pension because Mr Harrington says that doing that is the right thing to do. But No !
    Why do I not get a full pension – because I now live in retirement in Canada.
    The possibility of this being the case never ever entered my mind throughout my working life but circumstances changed dramatically when I was approaching retirement.
    My pension is now frozen for no justifiable reason as a result.
    This theft of my pension uprating is illegal in the real world but seemingly acceptable to the UK Government even though they are the only democratic country with a similar pension scheme to operate such a discriminative pension policy.
    The Government seem to think that the state pension belongs to them and not the pensioner who paid for it along with their employers over the years – wrong as it belongs to the pensioner !
    Stop the theft now Mr Harrington and let the government enter the 21st century and do away with this undemocratic policy by scrapping section 20 of the Pensions Act which should never have seen the light of day had the scrutiny committee looked at the evidence when under debate but we can thank Steve Webb with David Cameron condoning it’s inclusion. He should have listened and maybe is regretting not doing so.
    Read the Charter of the Commonwealth and see how this is contrary to the cintent that clearly says “We are implacably opposed to discrimination of any kind”. signed for you by her Majesty and ignored by the Government since but no doubt the other countries are expected to abide by the content. Shameful !

  9. I would add that Reciprocal agreements are not necessary for uprating the state pension and pension parity worldwide would solve the problem with Brexit and the pensioners involved in Europe.

  10. Regarding the state pension Mr Harrington I hope you will be the one to do the right thing by ending the frozen state pension scandal. As you say ” The country is in a great position. A couple of weeks ago we saw that the UK has a record employment rate and there are more people in work than at any other point in our history. This is fantastic news and shows the strength of our economy” ….so the usual dismissive remark from the DWP that the country (the fifth largest economy in the world) cannot afford to give the 4% of state pensioners an indexed pension, even though they have paid their contributions just the same as everyone else, is as untrue as it is blatantly discriminatory and dishonest. To treat 4% differently from the 96% just because of where they live and to dismiss their lifelong contributions whilst upholding the entitlement to an indexed pension for the rest is an outrageous injustice and I hope you will stop this theft now, if not sooner. This stain on the British reputation for fairness is now known worldwide and is a permanent shame on those who have done nothing about it for decades.

  11. As I posted elsewhere a few weeks back, I recently signed up a 19 year old for a PP into which she’s kicking off with contributions of £100 p.m. Yet because your government Mr Harrington has reduced and frozen the LTA, she’s on target right from the word go to breach it way before she reaches her target retiring age of 70. At some time in the not too distant future, perhaps no more than 20 or 25 years, best advice will be to stop contributing. What kind of incentive is that to save into a PP?

  12. Julian – I assume at the same time he will be reviewing the commutation factor to convert his DB pension to a lump sum – so it is consistent with current market real yields.

  13. She’ll almost certainly never be a member of a DB scheme. How many are there left apart from the public sector, those run by the banks and a few blue chip companies? DB schemes are an increasingly unsustainable luxury.

  14. how can the Minster claim that the new State Pension has been successfully introduced when there are so many angry women, frustrated by the delay in getting their state pension? Many women are now waiting an extra 5 or 6 years. This change introduced hastily giving women very little time to prepare and was appallingly communicated. Has the Minister not heard of Waspi nor noticed the angry demonstrators? I know two or more women who expected to get their pension at 60 and are now being asked to wait 6 years.

  15. how can the Minster claim that the new State Pension has been successfully introduced when there are so many angry women, frustrated by the delay in getting their state pension? Many women are now waiting an extra 5 or 6 years. This change introduced hastily giving women very little time to prepare and was appallingly communicated. Has the Minister not heard of Waspi nor noticed the angry demonstrators?

    • Andy Robertson-Fox 10th August 2016 at 9:33 am

      There was and is no guarantee as to the age from which the state retirement pension became or becomes payable. The transitional arrangements are disproportional on a short timescale but the Waspi protestors will receive their index linked pension entitlement governed by the parameters in relation to their date of birth.
      The frozen pensioner – Waspi or otherwıse – has a much greater case for equality, fairness and justice.

  16. I absolutely agree Lynn. I know a number of very angry women including relatives who have had their state pension date moved on 6 years with very little notice. Has the Minister not heard of WASPI to claim that the pension had been successfully introduced?

  17. People need to be educated about pensions. The national insurance scheme is really another form of tax and it is a pay as you go system. The government can change the benefits at will and it really needs to be viewed as a bonus rather than an entitlement. If you had to live on it you would be very poor indeed. It is today’s taxpayers that pay for the pension and it is not some kind of savings scheme where you can expect a payout in the future. The triple lock puts pensioners in a generous scheme that is bound to fall apart and the Government should focus on providing housing for younger people.

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