Instant analysis: Guy Opperman's insistence that the financial services sector should take responsibility for improving the retirement planning of the self-employed sees the problem put into the 'too difficult' category, and leaves entrepreneurs who do want to save exposed to poor value for money.
Guy Opperman's address, delivered in Edinburgh on Thursday, revealed a politician walking the line between two conservative tendencies.
The minister for pensions and financial inclusion opened by stating his belief in the power of free markets, despite their "irrationality at times" – but the policies he discussed were those of One Nation societal duty: hard-hitting punishments for defined benefit bosses, forcing businesses to act sustainably, and promoting consolidation as a route to better member value.
In setting the Department for Work and Pensions' stance on the self-employed, the minister's policy – to do relatively little – perhaps relies too much on the first school of thought and weakens his claim to be a disruptive innovator.
Fresh off the back of disappointing industry-led behavioural trials on self-employed pensions saving, Mr Opperman proceeded to confusingly lay the blame for low savings levels among the self-employed at the door of the industry.
"With 15 per cent of the population self-employed," Mr Opperman said, "I find it astonishing that you aren't engaging more to take these individuals into your schemes or into your funds."
Er, hang on. Is this the same high priest of inertia who declares weekly the successes of auto-enrolment, the good value of default arrangements, and in the very same speech decried the lack of bargaining power for retail investors?
The reality is that providers in both the trust-based and contract-based space are trying hard to win self-employed business. But short of a heroic marketing effort by master trusts – and the aforementioned DWP trial shows that we have far from cracked the behavioural problem here – a significant proportion of these will not save for retirement, and a large chunk of those who do will end up in retail products.
Unfortunately but predictably, the financial services industry does have its own interests at heart, and outside of the increasingly robust value-for-money framework surrounding occupational pensions, many members are paying far more than they should do for their savings products.
Indeed, research by Profile Pensions revealed that the majority of British people are paying too much for their pension, with one in 10 saving into long-term products with fees in excess of 1.5 per cent a year. The government's refusal to step in risks allowing this situation to continue to deteriorate.
That is not to say auto-enrolment is the answer. Self-employed industry groups regularly assert that their members do not want this solution, and we should listen to them.
But for the minister to lay the lame at the feet of the industry feels disingenuous, and suggests the self-employed have been shunted into the 'too difficult' pile on Mr Opperman's desk.
