WPC urged to ‘use its influence’ to improve member outcomes

The Work and Pensions Committee (WPC) has been encouraged to use its influence to urge the government and regulators to work with the pensions industry on improving member outcomes.

Responding to the WPC’s inquiry ‘Five years on from pension freedoms: Saving for later life’, Aegon head of pensions, Kate Smith, called on the WPC to encourage the government and regulators to collaborate with the industry to make “three improvements which could make a real difference in improving member outcomes".

Firstly, Smith pointed to the implementation of the 2017 review of auto-enrolment recommendations as a means to improving member outcomes, starting with a further freeze of the thresholds in April 2022 then publishing an implementation timetable.

She also highlighted enabling pension providers and schemes to provide additional support through more timely, meaningful and personalised guidance as a route to improving member outcomes, as well as bringing the Department for Work and Pensions’ pension disclosure rules for issuing wake-up packs in line with the Financial Conduct Authority’s regulations.

Also responding to the inquiry, Now Pensions echoed Aegon’s call for the government to take steps to implement the policy changes outlined in the 2017 auto-enrolment review.

“The topics raised in this inquiry are very close to our heart,” commented Now Pensions chair of trustees, Joanne Segars OBE.

“We have long been campaigning to raise awareness of the huge savings gaps that we see in the UK today. The state pension alone is unlikely to provide enough for the standard of living most people expect in retirement, which is why auto-enrolment has been so important in allowing the population to meet their retirement expectations.

“We congratulate the WPC on issuing this inquiry and we hope the government takes the steps necessary to ensure that these inequalities are addressed and given the attention they deserve.”

Royal London director of policy and external affairs, Jamie Jenkins, called for the implementation of the 2017 review to be “the immediate priority”.

“Reforms to lower the age from 22 to 18 and removing the lower earnings threshold will significantly increase the number of people saving in a workplace scheme, and substantially increase the amount being paid in for lower earners,” he stated.

“For the self-employed, if we harness the nudge principles, which have been successful in automatic enrolment, we will hopefully encourage greater pension savings among this largely under-saved population.

“One of the biggest challenges facing the industry is engaging workers with later life saving, and it’s encouraging that responsible investment is getting the attention of savers – reinforcing the notion that investment is not just about returns, but can also be a force for good.

“We should also start planning how we might raise contribution levels from the current rate at 8 per cent of earnings, to a level that will deliver greater financial resilience in retirement. While now might not be the right time to implement such changes, we should have a strategy for how this will be done in the years ahead.”

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