Recommendations & Conclusions
12 items
1
Recommendation
Third Report - Protecting pension saver…
Acknowledged
The Government has not acted on our recommendation to set a target of at least 60% for the combined use of Pension Wise and paid for advice when accessing pension pots for the first time. It also rejected our recommendation for a trial of automatic Pension Wise appointments, saying it …
Government response. The government is committed to monitoring the use of Pension Wise and the impact of the Stronger Nudge, using metrics such as the volume of appointments attended and FCA Retirement Income data. They will continue to gather evidence and insight …
Department for Work and Pensions
2
Conclusion
Third Report - Protecting pension saver…
Acknowledged
Many newly auto-enrolled people make minimum contributions, not realising that this will not be enough to give them an adequate living standard in retirement. The Pensions Commission designed auto-enrolment to get median earners part of the way to its definition of retirement adequacy, with the expectation that they would make …
Government response. The government is committed to carrying out further analysis to measure the adequacy of retirement incomes for current savers, and will provide an update of their analysis as soon as the data is available. They consider that a collection of …
Department for Work and Pensions
3
Recommendation
Third Report - Protecting pension saver…
Acknowledged
Although there are two commonly used measures of adequacy, there is currently no consensus in support of a single definition or what target the system should aim to achieve. We heard that building a new consensus on this—involving employers, trade unions, politicians, the wider public and the pensions industry—would be …
Government response. The government is committed to carrying out further analysis to measure the adequacy of retirement incomes for current savers, and believes a collection of measures, based on different methodology, provides a greater range of insight, than a single measure alone.
Department for Work and Pensions
5
Recommendation
Third Report - Protecting pension saver…
Acknowledged
There is a consensus that many people need to increase their pension contributions if they are to have an adequate income in retirement. Many told us that minimum contribution rates needed to increase above 8% if this was to happen. We welcome the former Pensions Minister’s aspiration to work towards …
Government response. The government acknowledges that current contribution rates may not be adequate but states that its priority is to implement the 2017 Review measures in the mid-2020s and explore ways to prompt savers to engage with their pensions.
Department for Work and Pensions
9
Recommendation
Third Report - Protecting pension saver…
Acknowledged
The number of self-employed people saving in a pension has declined since the late1990s when it was around 48%, to around 16%. This is in stark contrast to the 88% of workers eligible for auto-enrolment participating in pension saving. Trials to encourage self-employed people into pension saving have not been …
Government response. The government is committed to making retirement saving simpler for self-employed people and is working with Nest Insight on trials using financial digital platforms to test tech-based nudges. DWP is working with BASDA to explore opportunities to support self-employed people …
Department for Work and Pensions
10
Recommendation
Third Report - Protecting pension saver…
Acknowledged
We are concerned that many people working in the gig economy may be missing out on their right as a worker to build up a pension through auto-enrolment. The Pensions Regulator (TPR) told us it faces considerable challenges in enforcement, with employers challenging its decisions at every stage and having …
Government response. The government will continue to work with TPR and BEIS on the gig economy issue, noting that many workers are already eligible for auto-enrolment, and BEIS continues to explore options for collecting data on labour market trends.
Department for Work and Pensions
12
Recommendation
Third Report - Protecting pension saver…
Acknowledged
There is no consensus on how gender pension gap should be defined or any target to reduce it. Reports produced by stakeholders to inform the debate suggest the gap is significant and that little sustained progress is being made to reduce it. We recommend that the Department for Work and …
Government response. DWP continues to work with stakeholders across government to develop an appropriate definition of the gender pensions gap and build an evidence base to inform future policy outcomes.
Department for Work and Pensions
13
Recommendation
Third Report - Protecting pension saver…
Acknowledged
We recommend the Government consider the case for a carer’s credit, for example, to their auto-enrolment pension. If it chooses not to do so, it must explain its alternative plan to address the gender pension gap mainly caused by labour market inequalities.
Government response. The government is committed to continually monitor the use of Pension Wise which now includes the impact of the Stronger Nudge, and will continue to work with MaPS to consider feedback on users’ experience of the service and its impact …
Department for Work and Pensions
16
Recommendation
Third Report - Protecting pension saver…
Acknowledged
Divorced women’s pensions are much lower than those of men. There appear to be no reliable, regularly reported statistics on the number of pension sharing orders made on divorce. Research indicates that it may be as low as 5% of divorces. As a first step towards a strategy to improve …
Government response. The government welcomes having regular and reliable statistics on pension sharing in principle and will engage with HMCTS to understand the barriers to producing and publishing such statistics.
Department for Work and Pensions
17
Recommendation
Third Report - Protecting pension saver…
Acknowledged
Almost half a million people have stopped claiming Child Benefit since 2013 to avoid the High Income Child Benefit charge. We recommend that DWP explain what arrangements it intends to put in place to ensure this does not have a detrimental impact on their State Pension entitlement. (Paragraph 117) 58 …
Government response. The government has encouraged families who are responsible for a child under 12 to claim Child Benefit regardless of household income to help them build qualifying years of National Insurance for future State Pension entitlement and will keep this under …
Department for Work and Pensions
18
Recommendation
Third Report - Protecting pension saver…
Acknowledged
MaPS Chief Executive, Caroline Siarkiewicz, told us that the biggest challenge was working out how to help people understand their options and choices, “bearing in mind the huge numbers of people who do not know where to go for that.” MoneyHelper Pensions guidance is an important service, able to help …
Government response. The government supports appropriate marketing of guidance services, including MoneyHelper Pensions, subject to scrutiny. They are exploring further options for encouraging the use of guidance, and MaPS's Pension Guidance Transformation Strategy will improve triage and transfers between the services.
Department for Work and Pensions
21
Conclusion
Third Report - Protecting pension saver…
Acknowledged
We welcome the work being done to improve engagement and support savers in making decisions while they save, for example, through the development of pensions dashboards and the Mid-Life MoT and simpler annual benefit statements. DWP, MaPS and the FCA should continue to explore ways that savers can be supported …
Government response. The government will continue to help people become more informed savers, and are working closely with delivery partners to do so. The FCA has published rules for personal pension schemes, and are consulting on rules for dashboard operators.
Department for Work and Pensions