Third part of WPC freedoms inquiry to investigate gender pensions gap and AE

The third part of the Work and Pensions Committee’s (WPC’s) inquiry into pension freedoms and the protection of pension savers will assess how people plan the amount they need to save for retirement and later life.

Speaking at an Association of British Insurers (ABI) webinar, WPC chair, Stephen Timms, confirmed that this part of the inquiry will include auto-enrolment (AE), the gender pensions gap and how self-employed pension saving can be encouraged.

“The review in December 2017 of AE set out reforms to increase the amount being saved, lowering the age of AE from 22 to 18, removing the lower earnings limit so that contributions are calculated from the first pound of earnings, and in its response the government said its ambition was to implement those changes by the mid-2020s.

“The inquiry will look at what should now concretely be done, given that the mid-2020s are not that far away. This part of the inquiry will also cover the pension gender gap and how we can encourage pension saving amongst the self-employed.”

Timms also confirmed that the WPC will be looking into the problem of the increasing number of small pension pots in the second part of its inquiry.

“Flat fee charging structures can potentially reduce a small pot to zero, and I think there is real potential here for serious damage to confidence in pension saving,” he noted.

Pensions Minister, Guy Opperman, has previously stated the government’s intention to consult on regulations giving pension trustees and scheme managers the power to refuse a pension transfer if they have good grounds to do so based on the ‘red flags’ set out by the Pension Scams Industry Group (PSIG) once the Pension Schemes Bill receives royal assent.

Timms noted that the work on the regulations would be in parallel with the WPC’s scam inquiry and in consultation with the committee over “the next few months”.

“As we look at what these regulations may cover, I think we need to avoid excessively broad exemptions from them,” he added.

“I think it would be a mistake to exempt all FCA-registered schemes from these regulations. I’m hoping we will be working closely with the minister on the detail of this over the next few months.”

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