Webb: It is vital we ensure value for money
2014 promises to be just as much of a watershed year for pensions as the last.
The rollout of auto-enrolment will continue apace, with the number of employers staging increasing significantly this summer.
We still expect between 6m and 9m individuals to be enrolled by 2018, and so far opt-out rates have been encouragingly low at around 10 per cent.
Having listened to feedback from employers and the pensions and payroll industries on what worked well and what could be better, we streamlined the system to make it easier for employers to meet their duties.
We will develop our plans to enable employers to benefit from new forms of risk-sharing
As the Office for Fair Trading’s report on workplace pensions made clear, there is a very weak demand side in the market, as employers choose the scheme, not the member.
It is absolutely vital that we ensure savers – especially those placed in a workplace scheme by default – get value for money.
It is with this in mind that we are examining the 166 responses we have received to our consultation on charges, from a broad range of stakeholders, including industry, employers and consumers. We will offer our proposals in due course.
While it is our plans for a charge cap that have inevitably gained most attention, it is important we consider all the issues.
That is why, when we publish our findings on charges, we will also respond more broadly to the OFT’s findings.
We will not just cover charges but also critical issues around good governance, scheme quality and improved transparency for scheme managers and members.
We are also making good progress in our work with the industry to implement a system to allow automatic transfers of small pension pots, when people move jobs or schemes.
I am keen to see an industry-led approach that will give savers a better connection with their pensions and avoid auto-enrolment creating up to 50m more small pots by 2050.
We will develop our plans to enable employers to benefit from new forms of risk-sharing, which offer people more choice and greater certainty.
We have been studying responses to our proposals for new defined ambition pensions and will report back in the spring.
Underpinning all of this will be a new state pension, and a regular review of state pension age to ensure the system remains sustainable in the future.
The flat-rate pension will be simpler, clearer and will work alongside auto-enrolment to help people save more for their retirement. We expect it to pass into law in the spring.
Together these reforms will provide for a fairer and more sustainable pensions system.
Steve Webb is the UK pensions minister