The Department for Work and Pensions (DWP) has published its updated plans for the next four years of Parliament, including an intention to extend its auto-enrolment policy.
The DWP, now headed by Esther McVey after Theresa May’s recent Cabinet reshuffle, said it would continue the roll-out of auto-enrolment by extending it to small employers and the self-employed.
It said its pensions white paper, delayed until spring, would set out plans to meet the government’s commitment to strengthen the powers of The Pensions Regulator (TPR) in order to protect private pension schemes.
The DWP added it wanted to deliver a simplified state pension system to help retirement planning by continuing to implement the new state pension.
Through its communications, the DWP said it would also encourage more people to access to the ‘Check your State Pension‘ digital service. The service allows people to view a forecast of their state pension and the options they may have to improve it.
The government, however, said it would not change the pensions triple lock for the duration of Parliament. As part of its labour market strategy the DWP said it would support the retention, retraining and recruitment of older workers in the labour market through policy initiatives aimed at encouraging ‘Fuller Working Lives’ initiative.
The department’s corporate plan revealed a departmental expenditure limit of £6.8bn and an annually managed expenditure of £176.9bn.
Auto-enrolment engagement
“Auto-enrolment, with its low opt-out rate of around 10% and its progress in increasing the number of people with pension savings, looks like a success,” commented Aegon head of pensions Kate Smith.
“This may change as employee contributions jump to 3% in April, then to 5% in April 2019, so the government cannot afford to rest on its laurels. It needs to have an effective engagement strategy that continually talks up the value of lifetime saving and the benefits it brings.”
In light of recent defined benefit (DB) transfer news, Smith agreed with DWP’s plans to give TPR more powers.
“The latest DB shocks, including the Carillion insolvency with its grossly underfunded DB scheme, demonstrates The Pensions Regulator needs more powers to better protect members’ pensions,” she continued.
“Hopefully the forthcoming defined benefit white paper will tackle this. Another area worth exploring is how to give providers and schemes more powers to protect members against pension scams by allowing them to block suspicious transfers.”
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