Pension Credit – Commitment to Meet
The Minister has committed to meeting in June with the Pension Credit Team at DWP and pension industry experts. This will be organised by Pension Playpen.
Value for Money – Consultation in November
There will be a consultation this year (potentially November) on Value for Money. It will look at what constitutes Value for Money. A potential wholesale reform of costs and charges could be likely in the longer term.
CDCs and Decumulation – Consultation in the summer
A consultation has been drafted on Decumulation with a section focused on CDC and will be published in the summer.
Speaking at Pension Playpen’s weekly Coffee Morning, Guy Opperman, Minister for Pensions and Financial Inclusion said: “There is a cost-of-living crisis and inflation is affecting people on fixed incomes. In practice, Pension Credit is a benefit that is good for this situation. It addresses those who are vulnerable and have low incomes in particular to assist them with a top-up. However, the difficulty in reality is that it requires those who are eligible to apply.
“There is a cohort of pensioners whose poverty is supposed to be alleviated by Pension Credit but some are not applying. How does government fix this - do we need to look at long term reform of the State Pension and Pension Credit in its entirety? In June I will convene a meeting with those interested in addressing this problem, and the Pension Credit Team at DWP. We will also make people available in the interim. A massive thanks to Henry and others who have got behind this.
“On Value for Money – we have now taken this on and there will be a consultation this year that will look at what constitutes Value for Money. Firstly, I believe Auto Enrolment has been driven on take up and costs and charges – this is a young beast and we need to look at how we take Auto Enrolment and formulate it for the future. Although a key element, cost and charges have been the number one metric so far, but this is not tenable for the future. Second, and most important is investment performance - this is utterly key – outcomes for the consumer are what I am most interested in, in particular how this can be measured on a long and short-term basis. The third component I believe is a combination of customer service/satisfaction; scheme oversight and awareness – how can these things be articulated and measured?
“More specifically, I have a real concern that we have a very difficult system that makes proper comparison of costs and charges on pensions very difficult. My fundamental view long term is there should be a single cost and charge. I see this happening within five to ten years. It cannot be sustainable that people are unable to ascertain the nature of their pension investment on a long-term basis - it is the only product in the entirety of the UK where you cannot do this. That is a serious issue for me - in the longer term I see some wholesale reform of cost and charges.
“With regards to CDCs and decumulation, we have just finished drafting a Decumulation Consultation which I hope will be out this summer. This document has a section on decumulation and CDCs and specifically asks the industry how do we do this? With CDCs, we genuinely are reinventing the wheel, and I want to get it right first time as we formulate the policy and develop it for everyone – this is the tricky part. In the short term at least, the more the industry coalesces around a number of different versions of CDC, the quicker this will happen.”
Steve Goddard, CEO, Pension Playpen said: “I want to thank the Minister for taking the time out of his busy schedule to come along to Pension Playpen’s Weekly Coffee Morning to update us and importantly, hear what we as the industry are thinking. It was a frank, open and fascinating discussion. We look forward to meeting to discuss Pension Credit next month and contributing to the forthcoming Value for Money and Decumulation Consultations which we hope will ultimately create better outcomes for pension scheme members and pensioners in this country.”
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