Displaying items by tag: DWP

The Department for Work and Pensions (DWP) has responded to a bid from former Pensions Minister Stephen Timms MP to make pension guidance appointments automatic.

The DWP is set to "nudge" more DC pension savers to get guidance from Pension Wise - the government consumer help service - when they near taking pension benefits.

Private sector employee contributions doubled in the past decade from £8.3bn in 2009 to £16.6bn in 2019.

Almost 9 in 10 of eligible employees (88%, 19.2m people) have saved for retirement through their workplace pension: an increase from 55% in 2012 when automatic-enrolment began, DWP figures have said.

However, pension participation among self-employed people continued to fall from 21% in 2009/10 to 14% in 2018/19.

The annual total amount saved for eligible employees was £98.4bn in 2019, an increase of £5.3bn from 2018.

£40.5bn was saved into public sector schemes (41%), with £57.9bn (59%) saved into private sector schemes.DWP data from December 2019 showed 5.44m people were employed in the public sector (16%) compared to 27.55m (84%) people in the private sector.

Following the release of the data, Hargreaves Lansdown shared concerns about the pension savings figures for the self-employed.

Nathan Long, interim head of policy at Hargreaves Lansdown said: “The self-employed continue to be precariously placed with just a handful choosing to save into a pension, showing the existing incentives just don’t resonate. The Government will also be acutely aware that 41% of all pension contributions go to public sector employees that represent less than a fifth of all workers.”

The Government’s consultation on the proposed Pensions Dashboard has concluded and the report, published yesterday, pledged primary legislation to make it a reality.

A new report into the BSPS debacle has heavily criticised regulators including the FCA and TPR.

XPS Pensions Group, the influential pension consulting and administration firm, has voiced its support for the government’s proposal to introduce Collective Defined Contribution pension schemes.

In November, the DWP detailed its plans for the new type of occupational pension scheme which will be subject to a 0.75% charge cap with the aim of keeping costs down. Royal Mail is already looking at introducing a CDC.
The government gave the green light last year for CDCs and plans to legislate for them in due course although critics have already warned it could take years for CDCs to arrive and they may risk fluctuating income for members in retirement because of their structure.
 
XPS says in its submission to the government on the proposal to introduce CDCs that they could provide “better outcomes” for employees than traditional DC schemes.



However, it said they may take choice away from members and present additional risks so it is “critical they are well designed and managed.”

XPS Pensions Group says there are three key areas the DWP and Pensions Regulator will need to consider to ensure the development of a successful CDC framework. These include:
 
1.      Sustainability and resilience of CDC schemes for the future
2.      How to ensure fairness of outcomes between generations
3.      Member understanding and expectation

Consultation on CDCs ended last week.
 
Jacqui Woodward, senior consultant at XPS Pensions Group said: “In our view it will be possible to develop an appropriate disclosure framework that adequately communicates CDC benefits to members. 

“However, we would caution against underestimating the risks of CDC schemes in the rush to get them established.  It is worth taking time to make sure that the new types of scheme can offer a genuine and safe alternative to members and we look forward to providing our input to further consultations on the detailed design of CDC arrangements.”

MPs on the Works and Pensions Committee have voted to investigate contingent charging on pension transfers but some in the industry are sceptical about the benefits of such a move.

Experts have had their say on the appointment of Amber Rudd as Work and Pensions Secretary and spoke out about what her priorities should be.

Amber Rudd has returned to the cabinet as Work and Pensions Secretary following the resignation, over the Brexit deal, of Esther McVey on Thursday.