Pensions and financial inclusion minister Guy Opperman says he hopes to harness fintech to boost saving for the self-employed, while aiming to bring in legislation for defined benefit regulation next year.
From the government’s review of auto-enrolment in 2017, to the publication of its DB white paper in March, the past 12 months have seen a significant amount of progress made, but there is still some way to go.
The capability of app-based financial services providers is going to be something that will be a massive assistance to the problem of auto-enrolment for the self-employed
Guy Opperman, minister for pensions and financial inclusion
Fintech for self-employed
Speaking in a recent Pensions Expert podcast, Opperman highlighted that auto-enrolment has been his “number one priority” since he started his role last year. This includes trying to ensure a smooth introduction of the contribution increases, and keeping opt-outs low.
“It is early days… [but] all the present indications are very, very good,” Opperman said – citing low opt-out rates so far, “very positive engagement from the industry”, and feedback from individual constituents and different organisations.
The auto-enrolment review set out the government’s intention to test “targeted interventions” with the self-employed. But there is still no concrete solution to get this large and diverse group of people saving.
“We have been looking at a variety of ways to try and take the successes of employed auto-enrolment and apply them to the self-employed,” Opperman said.
However, he noted that there is no one-size-fits-all answer, highlighting the need to come up “with individual solutions to individual problems, and that’s what we’re working on”.
Opperman also emphasised fintech’s ability to change the way people look at saving and investments, noting the growth of “clever, nudge-based behavioural economics financial services companies that are very relevant to the modern era”.
“It’s my increasingly strong belief that the capability of app-based financial services providers is going to be something that will be a massive assistance to the problem of auto-enrolment for the self-employed,” he added.
Facilitating consolidation
The government also has a lot on its plate with DB pensions. In its white paper, the Department for Work and Pensions encouraged the creation of commercial consolidators, but noted there is currently no authorisation and supervision process for such vehicles. Shortly after the paper was published, the UK’s first consolidating vehicle, known as The Pension SuperFund, was announced.
Opperman said that a consultation process to develop an authorisation framework will be carried out later this year, with a view to bringing in “legislation in which these vehicles will be required to operate in due course”.
He said he wanted to regulate the DB sector “with a light but firm touch, so that we don’t punish those who are doing a fantastic job”, while looking at the appropriate amount of regulation.
