Products that allow the public to save into both a pension and a liquid pot are an opportunity that all employers should be embracing, Guy Opperman has said.
Sidecar savings products would allow defined contribution (DC) members to put aside money for retirement while also building up a separate savings pot, which they could access at any point.
The developing model diverts savings, made directly by employers in pay, into a pensions account once savings hit a maximum cap. Once the pot is accessed, the pot begins to refill.
The pensions and financial inclusion minister urged other employers to consider offering a similar product.
In a wide-ranging speech at the Trades Union Congress annual pensions conference yesterday (5 February), he said: “Sidecar savings is something that should be front and centre of what you as an organisation are doing. This is an opportunity for all of us to change the world.”
NEST is in the process of trialling the product with retailer Timpson, which has 5,600 employees.
Also at the conference, Opperman said he was “very confident” that he would introduce a private pensions bill in the government’s next Queen’s Speech.
The bill would likely include legislation for a number of recent Department for Work and Pensions (DWP) policy initiatives, including additional powers for The Pensions Regulator, an authorisation and supervision regime for defined benefit consolidators, and provision for collective defined contribution (DC) schemes.
Opperman noted the DWP had already agreed it would be the only bill it puts forward, with this being introduced in “a matter of months”.
“We are very ready to go,” he said. “We are in the process of drafting. Clearly, it depends on parliamentary time.
“Provided that Brexit goes well, then we will have a new Queen’s Speech shortly and that will feature a private pensions bill.”
The minister and the DWP yesterday launched a further consultation on investment of DC funds, seeking views on opening up patient capital, including performance fees within the charge cap, and encouraging consolidation of small DC funds.