Pensions minister: How I'll work with industry to support consumers
Guy Opperman says we need to get people to fall in love with pensions again and give them the tools to achieve a more secure retirement
With a new year, it's an opportunity for new resolutions to be made.
While for many the obvious ones are to do more exercise, drink less alcohol and eat fewer takeaways, for me the most important of all is that people should use January 2018 as the chance to review how they can save over the next 12 months and become wiser with their money.
Why? Because the reality is that for too long in this country, savings, investments and pensions have been in retreat. We have delivered fantastic results through automatic enrolment in the past five years tackling the downward trend in saving.
I want to take the opportunity of the New Year to reiterate my vision to you, the pensions industry. We need to get the British people to fall in love with pensions, savings and investments again; to grasp clearly that having money put away gives you options - not only to own a home, but to change career, survive life's setbacks and - crucially - to provide better living standards in old age.
It would be foolish for me to suggest that this will be delivered by the government alone. I am clear that we need to work in partnership, to ensure consumers are planning ahead.
With that in mind, here are my four key messages for how the pensions industry can work with me to ensure consumers engage with their finances in 2018, to achieve a more secure retirement.
1) Engage with workplace pension savers
In 2017, automatic enrolment celebrated its fifth anniversary. Following a sharp drop in workplace pension participation between 2003 and 2012, we have revived Britain's saving habit: more than 9 million customers have now been automatically enrolled by over 980,000 employers.
With automatic enrolment now set to benefit 18- to 21-year-olds, lower earners and multiple job holders following the government's review published last month, this upward trend should only continue - further good news for the industry.
In the meantime, challenges remain, not least the low levels of consumer engagement around pension saving. With contribution rates increasing in April 2018 and 2019, I believe the pensions industry has a crucial role to play alongside government to engage consumers on the clear benefits of saving into a workplace pension. After all, through long-term saving and compound interest, this will only help grow every penny saved for retirement.
2) The pensions dashboard: Join us on the journey
Automatic enrolment has clearly reinvigorated workplace pensions, but I want to go much further by using digital innovation. That's why I see this year as a defining one for the pensions dashboard: the single most exciting innovation in savings and pensions that this country has seen for many years.
In December I hosted a stakeholder day with hundreds of representatives from across the pensions industry, consumer groups and regulators, as we look towards creating a platform that allows all of us to understand our savings. The reaction to this event was incredibly positive, and we are currently leading a feasibility study to ensure consumer interests are properly safeguarded. I expect our findings to be published in the spring, with a view to testing this exciting new tool from 2019.
I urge the industry to throw their support behind the pensions dashboard. In the meantime, as I look to increase consumer engagement in pensions, what more can you do to ensure your customers understand their savings and what it is being invested? What more can be done to explain a pension statement? Could they be investing their money more wisely?
3) Work with us to tackle pension scammers
Last year I confirmed our intention to bring forward new measures to protect savers from pension scammers. This will not only deter criminal activity, but also improve the level of trust in the pensions industry.
Our measures to ban cold calling, limit the statutory right to transfer and tighten scheme registration rules are all designed to reduce the number of transfers to illegitimate schemes. This will both reduce the scope for pensions fraud and reassure people of the high standards they can expect from reputable pension providers.
We all know the potentially devastating impact pension scams can have. So while we look forward to legislation being taken through parliament, I urge the industry to help make their customers aware of the tactics scammers can use, how to be scam aware, and to report suspected scammers to Action Fraud immediately.
4) Emphasise that help is on hand
Given the millions of new savers through automatic enrolment, in June the government underlined its commitment to making financial guidance accessible to everyone by announcing its intention to table a Financial Guidance and Claims Bill. This will produce the merger of the existing services provided by Pension Wise, The Pension Advisory Service and Money Advice Service to create a clear, single financial guidance body.
Clearly there will remain an important place for advice provided by qualified regulated advisers. But thanks to this new body, it will offer free, high quality, impartial debt, pensions and money guidance before consumers decide whether it is helpful to have additional support from a regulated adviser - good news not just for independent financial advisers, but the wider financial services industry.
With the bill expected to complete its journey through parliament shortly, I urge the industry to not only ensure consumers continue to feel well supported in engaging with their pension saving, but are aware of the benefits that Pension Wise, The Pension Advisory Service and Money Advice Service can still provide.
It is clear that work needs to be done to ensure people are consistently engaged in their pensions, protected from practices that are a threat and have a high degree of confidence that the financial system will work for them.
For me, I want to give people the tools to take control and make them match-fit for their future. I am committed to working alongside you to ensure that when people reach the crossroads of employment and retirement, it's a journey they can look forward to.
Guy Opperman is minister for pensions and financial inclusion
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