Pensions and financial inclusion minister Guy Opperman discusses the Government’s savings priorities in an exclusive op-ed for Money Marketing
During my first few months as minister for pensions and financial inclusion, I’ve been struck by both how much we’ve achieved in recent years in helping people save for their retirement, and the challenges we must work hard to address to ensure they have the capability and resources to plan for it.
As Money Marketing readers will know, automatic enrolment has created a new savings culture and brought millions into pensions savings.
As it reaches its fifth birthday, the latest figures show that over 8.7 million eligible employees have been automatically enrolled into a workplace pension. To put that into context, this is around the combined population of Scotland and Wales and, by 2018, we expect that figure to include the population of Northern Ireland too.
Recent research has highlighted how workplace pensions have become ‘the new normal’, with four in five people now saying they know where to go to find out more information, and would welcome increasing their savings alongside employer contributions.
This is an amazing achievement, but it is clear that our work is not yet complete here. That’s why we are carrying out a review of automatic enrolment, looking at how we can continue to build upon its success and encourage as many people as possible to save into a workplace pension. We’ve received a great deal of positive engagement from industry and consumer groups, and we intend to report to Parliament before the end of 2017.
Given the millions of new savers through automatic enrolment, it’s important that people know what support is available when managing their personal finances. For that reason, I’m very proud to be working on the Financial Guidance and Claims Bill, which will create a clear, single financial guidance body, bringing together the existing services provided by Pension Wise, The Pension Advisory Service and Money Advice Service.
Clearly there will remain an important place for advice provided by qualified regulated advisers. But thanks to this new body, a more joined-up service will be able to offer free, high quality, impartial debt, pensions and money guidance, to support any financial decisions which consumers need to make before deciding whether it is helpful to have additional support from a regulated adviser – good news not just for IFAs, but the wider financial services industry.
We are also committed to providing the protection that will help consumers to have faith in their private pensions’ savings particularly in the defined benefit sector, which has undoubtedly been rocked over the past year. We have consulted with the industry at large and will be publishing our White Paper with thoughts on the sector later this winter.
It’s vital that all those with their savings in these schemes continue to have belief in their resilience – that’s why the White Paper will outline what reform is needed to support the sector, including the powers of the Pensions Regulator. We will ensure that the system continues to balance the needs of consumers, industry, the schemes themselves and wider business for the future, to ensure that no one group is unfairly disadvantaged.
On top of this, I recently confirmed our intention to bring forward a series of new measures to protect savers from pension scammers, including a ban on pensions cold calling.
I’ve made clear that this will help cut off private pension scams at their very source, by removing the main mechanism used to persuade people that scammers are offering legitimate pension investments and services. But this clamping down on unscrupulous scammers also has the potential to benefit the pensions industry. Additional measures to limit transfers and tighten scheme registration rules will not only reduce the number of consumer requests to transfer to illegitimate schemes, but also reaffirm the trust reputable ones are entitled to from consumers.
With the pension savings landscape changing so quickly, the Government and industry have a responsibility to support and protect this new savings culture. My focus is on two things: doing what’s best to ensure people can build towards a financially secure future, and giving people confidence in a pensions system that is here to support everyone, no matter their income or background. As we continue to work hard on this, I look forward to working with our partners to make this a reality.
Guy Opperman is the pensions and financial inclusion minister