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Pensions minister threatens to ‘name and shame’ on auto-enrolment

Steve Webb 480 LibDems DWP

Pensions minister Steve Webb has threatened to “name and shame” providers who do not introduce measures to prevent people being automatically enrolled into poor value schemes.

Earlier this week, Aviva issued a statement committing to only use “modern” schemes with low-cost charging structures for auto-enrolment.

In a wide ranging speech, Webb told delegates at the National Association of Pension Funds conference in Liverpool he would publicly criticise insurance companies who allow savers to be auto-enrolled into “dodgy” legacy schemes.

Webb said: “If we are convinced the market will deliver quality for everyone then we will not need to intervene. Aviva are saying they will not allow employers to automatically enrol their workforce into a dodgy old scheme, they will create a new scheme instead.

“That is one insurer saying it will not auto enrol people into dodgy schemes, but what about the rest? I want every provider to guarantee not to enrol people into high cost legacy schemes.

“I will name and praise anybody who does it, and name and shame anybody who doesn’t.”

Webb also indicated a forthcoming paper on reinvigorating occupational pensions, due to be published before Christmas, will investigate how the Government can encourage greater scale in the pensions market.

He said: “I have huge sympathy with the points the NAPF is making about scale. We do need to get on with scale and our consultation document on reinvigorating occupational pensions will touch on the issue.”

In addition, the pensions minister also set out plans for “time limited DB”. Under the proposal, the member would accrue DB benefits when they work for a company. The fund would then be converted to DC when they leave.

“We are looking at the idea of ‘time limited DB’. It would provide defined benefits when you work for a company and becomes DC when you leave.

“It would mean the firm isn’t exposed to investment risk, inflation risk or longevity risk because the DB promise ends when the worker walks out of the door.”

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Comments

There are 7 comments at the moment, we would love to hear your opinion too.

  1. Oh that is good news. Presumably therefore he will stop the misinformation about NEST charges, be open regarding poor fund choices and will also come clean about what people might realistically expect from the sacrifices being imposed now. I’m not talking about those in the 20’s, but those in lower paid occupations in their 40’s and above who will see little advantage and possibly even detriment when they come to take their paltry benefits.
    So Webb old fruit if you are going to name and shame – don’t hold back.

  2. On the face of it this sounds like a good idea but under TCF etc, the providers should be doing this automatically and if they are not then I thought there were sanctions in place to deal with this. Perhaps the Government (as David Cameron has promised with Energy Companies) should insist that every pension company should be compelled to offer its best rate. On this basis they would have to compete on service and investment performance only.

    However, can we extend the naming and shaming princilpe to the Regulators who have so seriously failed to regulate the banks etc and therefore allowed the country to be plunged into the economic mess that we currently enjoying. Rather than paying bonuses they should be naming and shaming the individuals within their organisations who allowed this tate of affairs to come about.

    I would also like to see naming and shaming exended to Government ministers, senior civil servants and MPs (both UK and European based).

  3. I’m all for naming and shaming high charges

    So Will Mr Webb ensure that on all pension illustrations both private and NEST show in big clear letters on the page referring to charges that his Government will be deducting 10% tax on all equity dividends received by the members fund?

    And will the effect of this high Government charge be including in the reduction in yield calculations.

  4. Every time Steve Webb opens his mouth the grins on insurance company CEOs must be getting wider and wider.

    First RDR delivered them cost-free product distribution and now Steve Webb is handing them a get-out-of-jail-free card for the unsustainable commission deals struck in the Stakeholder pension group scheme land-grab.

    Don’t think for a moment Aviva’s decision is down to anything other than self-interest – they see an opportunity to wriggle out of their commitments and they’re taking it.

    Anyone with a group pension book who still believes commission on these schemes will last needs to wake up.

  5. N – Not thought out very well
    E – Employee investment choice severely limited
    S – Systems not designed to cope with this type of scheme
    T – Totally unworkable and ill considered

    It will go wrong and any IFA who chooses to advise on it will become liable to the almighty cock up it is going to turn out to be.

  6. Another hard man eh? Don’t they just get on ya tits!

  7. I see Pete Taylor has 2 tits hence why he repeated his comments.

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