Speaking at the PMI annual conference hosted in London yesterday, attended by over 160 industry professionals, the Pensions Minister Baroness Ros Altmann told delegates that the UK is in the middle of a pensions and retirement revolution with radical reform happening all the way through from state to private pensions.
Discussing recent and forthcoming changes Baroness Altmann said; ‘The introduction of the flat rate state pension is a good thing - it is a more sustainable, affordable and suitable system for a society which, going forward, will be required to do much more for themselves. Something they can understand, plan for and gives them some hope of actually predicting the income they might get in retirement. We should also remember that whilst auto enrolment has brought six million more individuals into the pensions system, we are still only a fraction of the way through it with approximately 90% of employers still to go through the process. This will bring a further three million savers into the system. Over the next four years we are expecting pension contributions to quadruple. We expect the full auto enrolment project to complete in 2019, and then we will look at auto escalation as a next step.
These kinds of numbers bring a big responsibility to those of us working in pensions. It is also important to remember that pensions isn’t just about the money, it’s about people. Whilst we must come up with solutions and systems we must also make sure we are empowering people to be able to make decisions for themselves and plan for their unique retirement needs. We want and need people to have a good experience of pensions and, ultimately, a better standard of living in retirement but we must be mindful that not everyone is equipped to make decisions and we must help them. Helping them to engage with savings and to leave the money alone, and let it continue working for them is the preferable thing to do.
It’s also going to take time to rebuild trust in pensions, it’s fair to say pensions still have a fairly negative ‘image’ in the mainstream press. By making pensions engaging and accessible we should be able to change this and motivate the public to save. I would love to see a big industry campaign that talks about ‘great pensions’. This is a really exciting time for the industry to come up with new and innovative products to meet the new demands. Yes - we need to manage expectations, yes - it won’t be easy. But this is also a very exciting new landscape.’
Altmann also updated the delegates on upcoming initiatives including a new consultation for a new pensions guidance body to address guidance and advice – this will be a merger of TPAS and Pensions Wise. There will also be a new slimmed down money guidance body, earliest expected date of April 2018. Altmann responded to delegate questions on pensions dashboards saying she would welcome the industry coming up with something suitable, with a planned expectancy of 2019. Other points of note in her speech were that next steps on pensions freedoms would be to remove the ‘Hobson’s choice’ of barriers to access pensions.