Duncan Smith warns employers of levelling down following auto-enrolment

In a speech addressing the industry, the secretary of state said auto-enrolment marked a tipping point for pension provision. He stated the private pension industry should “seize the opportunity” and build on it.

Duncan Smith said: “Auto-enrolment is not an invitation - and I repeat not an invitation for the industry to start levelling down.

“It must provide the stepping stone for increased quality provision and I really do say that because without the engagement of the private sector doing the right thing this will not be a major success.”

He voiced concern over the largely negative perception of pensions following the “great names” such as Maxwell and Equitable Life and cited high charges and degrees of uncertainty compounded the reputation.

On the state pension reforms announced this week, Duncan Smith said he had taken some tough decisions but believed increasing the state pension age was vital. More debate would follow, he revealed.

He countered: “The state pension is only half the answer – private pension saving must form, of course, the other half – and that’s the point, they are related and they work with each other.” 

In emphasising the importance of this, he said: “Private pension saving is vital, no less than vital to the well-being of society and to the economy in general.

 “If we don’t take the responsibility to do something about this today, we put the burden squarely on the shoulders of our children tomorrow.”

Duncan Smith mused the challenge would be to maintain the momentum of Nest and auto-enrolment.

Accountability for failure to save into pensions ultimately lay with the taxpayer, Duncan Smith stressed, pointing out five million fewer employees saved into an occupational pension today than in 1997. 

Duncan Smith addressed the industry during an event marking the progress of the National Association of Pension Funds’ Pensions Quality Mark initiative.