An interview with Rt Hon. Richard Harrington, Minister of State for Department for Work and Pensions. An excerpt from the DC Pension Design & Investment 2017 report

Máire McGuire: What are the concerns and priorities of the new pensions’ minister?

Rt Hon, Richard Harrington: One of my priorities as Pensions Minister is to continue the successful rollout of automatic enrolment. A big part of this is making sure that people understand the benefits of remaining in the pension scheme set up by their employer. Over seven million people are now saving into a workplace pension and I’m especially encouraged to see that the biggest increase in participation has come from people in their 20s, who have always been less likely to start saving. But there is still more work to be done. We are in the most challenging phase of the rollout, getting small and micro employers to sign up automatic enrolment. They now hold the key to getting the nation saving.

Another priority for me is seeing the Pension Schemes Bill through Parliament. This is an important piece of legislation to provide greater consumer protection to Master Trust scheme members. We are ensuring that there are strong standards that Master Trusts must meet before being allowed to operate. The Bill will also give The Pensions Regulator new powers to intervene when a scheme gets into trouble.

I am also aware of the concerns around the affordability of traditional Defined Benefit pension schemes. I recognise the need to look at these issues in detail and ensure there continues to be confidence in the sector. In truth the reports we’ve seen surrounding these issues are far from universal and many schemes are run effectively. But I will be addressing these important issues in a Green Paper shortly to delve into the challenges in more depth and outline our current thinking.

Máire McGuire: How do you see the roll-out of auto-enrolment in terms of the minimum contribution percentage and getting people enrolled?

Rt Hon. Richard Harrington: After years of people not saving enough, automatic enrolment is helping millions of people start saving into a workplace pension. This is also the first time that many have started saving for their retirement. But with this significant change in behaviour, we must give people time get used to it. That is why we are gradually phasing in rises to contribution rates in April 2018 and April 2019, and have timed these to coincide with the beginning of the tax year so that the impact is more manageable for both employers and individuals.

But of course we need to build on our current success and now is the right time to consider who else – beyond the 10 million already set to benefit – could gain from automatic enrolment.

In December we announced a review of the policy which will explore ways that it can be further developed. The review will gather evidence on groups such as people with multiple jobs who do not qualify for automatic enrolment in any single job. It will also consider how the growing numbers of self-employed people can be helped to save for their retirement. I look forward to hearing from the industry on these issues in 2017.

Máire McGuire: The pensions’ industry is making good progress in developing the pensions’ dashboard; will the government provide a steer where necessary? How will this work?

Rt Hon. Richard Harrington: strongly believe that the industry can help us overcome a number of challenges around getting people to save more and by continuing to make pensions simpler and more accessible for people. The industry-led work on a pensions dashboard is a great start. I want people to take more ownership of their own money and technology can help them to do this. We’ve already seen through the growth in online banking that people want instant access to information about their finances. If better, more dynamic tools were provided we could help millions of savers see more easily the money being saved is theirs and is simply deferred pay for when they chose to retire.

Máire McGuire: What changes can employers and members of workplace DC plans expect as a result of the UK exiting the European Union and how will obligations of employers in a post-Brexit world be different?

Rt Hon. Richard Harrington: We are committed to getting people saving through automatic enrolment and our plans for workplace pension are enshrined in UK domestic law. So the legal requirement on employers to enrol their staff will continue.

Máire McGuire: On the broader issue of education of people in making their pensions freedom choices, how is the government planning to help in that respect?

Rt Hon. Richard Harrington: It is absolutely vital that people make the right choice with their hard earned savings and they seek financial guidance if they are thinking of accessing their pension pots flexibly. That is why we set up Pension Wise when we introduced the pension freedoms in 2015, to help people aged 50 and over with a defined contribution pension pot understand the new options available to them. Pension Wise provides a free and impartial service both over the phone and by individual appointments using trained guiders in the CAB network, and over 100,000 people have already benefited from it. Indeed, both Pension Wise and The Pensions Advisory Service can provide online and over the phone guidance including how to avoid pension scams.

Financial guidance is incredibly important which is why we are now consulting on how we can improve publicly funded debt advice, pensions and money guidance. We plan to bring these together into one body, which will ensure consumers can access the high quality, impartial financial guidance and debt advice that they need to make effective financial decisions.

You can download the full report online for free - DC Pension Design & Investment 2017.