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Steve Webb: Govt should use trivial commutation to promote savings

Pensions minister Steve Webb says the Government should use trivial commutation as the “selling point” of automatic enrolment to promote savings.

Current trivial commutation rules allow people who are over 60 years old with total defined benefit and defined contribution pension savings worth less than £18,000 to take their entire pot as cash.

Speaking at a Strategic Society Centre event in London today, Webb said trivial commutation rules could be used to boost take-up among the over-55s.

He said: “In the early days of auto-enrolment we know there will be lots of people enrolled for a few years and ending up with a few thousand pounds.

“We need to communicate the fact that is still worth doing because if they can find anyone to give them an annuity for it they won’t be very impressed. Actually the way they feel about a £2,000 pension is very different from a £2,000 lump sum.”

Webb said older people are more likely to opt out of auto-enrolment because they underestimate the cost of retirement as well as how long they will work and live.

He added: “How do we communicate to those older workers that even relatively modest pension savings are worth having because you get employer contributions, you will work longer than you think and you don’t save as much as you think, particularly in a DC world?”


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  1. Steve Webb talks about trivial rules and employs one himself to deny ex-pat pensioners their rightful paid for indexed pension. The current regulation 3 and clause 20 in the new Pensions Bill do just that.
    Trivial – yes in comparison to the overall picture where the Pensions Bill is about 90 Billion GBP and the cost of paying ALL pensioners worldwide, ie. pension parity, would be about 0,7 % of that figure.
    Given that the DWP got their act together and stopped false claims which amount to 2.5 billion GBP there is no creditable argument for this discrimination. In any case the country of residence of a pensioner is no reason to deny them their proper pension.

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