By Matt Ritchie
Pensions minister Steve Webb has called on the industry to be positive in the lead up to auto-enrolment, stressing the need for those involved in pension provision to sell the benefits of the new regime.
Speaking at the National Association of Pension Funds’ DC conference in London this morning, Webb said it was unlikely the introduction of auto-enrolment would run without a hitch. While there would be some that pounce on the negative it was important the industry got behind the initiative.
“There is good reason to be optimistic at the moment. We all know that everyday there’s another pension story and every time it’s doom and gloom. Today it’s strikes, another day it will be Solvency II, or it will be ‘people opt out of auto-enrolment shock’.
“We know there’re negative stories to be written, but let us all in this room be part of writing the positive story,” Webb said.
Webb highlighted “unsold” benefits of auto-enrolment, such as how annuitisation under DC can balance out the disproportionate effect of increasing state pension ages on lower income groups.
As those on lower incomes tend to also have shorter life expectancies, they can be punished more harshly than others by increases to the state pension age.
However, Webb said that through accessing impaired life annuities some of this disparity can be addressed.
A further benefit involved the new Universal Credit benefit system, which brings a range of benefits into a single payment.
Webb said income for eligibility for the benefit is assessed net of contributions to a pension scheme, meaning that in combination with employer contributions and tax relief Universal Credit payments can see recipients gaining a return of up to six pounds on their personal contributions.
“Where else can lower earners get that kind of return, or indeed anybody?”