After Paul Maynard was appointed as the new pensions minister at the Department for Work and Pensions, Rachel Vahey, head of policy development at AJ Bell, outlines four key priorities for the new pensions minister:
“Paul Maynard is taking on the mantle of pensions minister at a vital time. He inherits a full in-tray to get to grips with, with the DWP’s update on the Mansion House Reforms due around the Autumn Statement. This will outline how the DWP intends to take forward the Treasury’s aim to increase pension fund investment in UK assets, helped by consolidation of schemes. But with a Pensions Bill missing from the King’s Speech it’s unclear exactly what the DWP’s next step is.
“But there are other things to grab Mr Maynard’s attention. The UK still faces a pensions gap with not enough people saving for their retirement. Although Mr Maynard’s tenure is expected to be short, leading up to a general election, that doesn’t mean he can take his foot off the gas. Instead, he has the opportunity to drive forward the pensions agenda and set the tone for the next government.”
Four key priorities
- Making the Mansion House Reforms work
After the headline announcement in July, Mr Maynard needs to find a way of encouraging more pension investment in UK plc, in the face of keen interest from his opposition. Shadow chancellor Rachel Reeves recently announced Labour would conduct a sweeping review of the UK’s pension schemes to find ways of unlocking pension capital.
- Setting a new automatic enrolment agenda
Automatic enrolment has been an out-and-out success in creating millions of new pension savers. It now needs to move onto phase two. We expect to soon hear details of how the DWP want the minimum age lowered to 18 and the minimum contribution limit removed. But it cannot rest there – people and their employers need to save more if they are to have the financial retirement they want. These things take time, so a plan needs to be put in place now to raise the contribution rate.
- Implement pensions dashboards
Making sure people know how many pension pots they have and how much they are worth seems like a basic ask. But it has taken various governments decades to tackle this question. With the pensions dashboard being pushed back again, this important initiative cannot be ignored. Not only will it allow pension savers to understand what they have saved so far, they can be nudged into saving more and consolidating pension plans to get the best deal for their retirement.
- Remove barriers to transfers
It’s important to stop pension scams but equally vital that pension savers are able to transfer to safe pension schemes easily and simply. However, many transfers are being stalled by over cautious pension schemes who dare not disobey one letter of the regulations. The DWP needs to re-write the transfer regulations making sure that it’s only the truly dubious transfers that are stopped, not people transferring their pension wealth to reputable schemes.