The National Association of Pension Funds (NAPF) commented on the launch today (Thurs) by the Department of Work and Pensions of the paper ‘Reinvigorating Workplace Pensions’.
Joanne Segars, NAPF Chief Executive, said:
“We have been calling on the Government to take action to reinvigorate workplace pensions for some time, so it’s good to see them setting some ideas out for debate.
“This is a clear and timely paper that is asking the right questions as we move ahead with auto-enrolment. It also recognises that building scale and having fewer, larger schemes could be vital to delivering well-governed, value for money pensions for workers.
“Pensions are now very polarised, particularly in the private sector, with older ‘final salary’ pensions at one end, and the newer ‘defined contribution’ system at the other. Either the business bears the risk of paying a final salary deal, or the saver carries the risk of not knowing exactly how much they will get.
“There could be room for a middle way where that risk is shared. It is certainly worth exploring and the NAPF has been involved in the debate. Larger employers in particular might be interested in defined ambition, and some already offer such pensions.
“Defined ambition is not going to be for everyone, and millions of people are going to be automatically put into a defined contribution (DC) pension, many for the first time. It is important that we do not get distracted from the task of getting good value for money out of the DC pension model. We need to improve transparency around charges and explore economies of scale.”
On the ‘star rating’ system mentioned in the DWP press release, Ms Segars added:
“We agree that people need a simple way to identify a good pension. That framework already exists and the NAPF launched it around three years ago. Almost a third of a million workers in 165 different companies are in a DC pension that is approved by the Pension Quality Mark. The Mark distinguishes well-run pensions where contribution rates are good and where benefits are clearly explained to staff.”
Notes to editors:
1. The NAPF is the leading voice of workplace pensions in the UK. We speak for 1,300 pension schemes with some 16 million members and assets of around £900 billion. NAPF members also include over 400 businesses providing essential services to the pensions sector.
Paul Platt, Head of Media and PR, NAPF, 020 7601 1717 or 07917 506 683, [email protected]
Christian Zarro, Press Officer, NAPF, 020 7601 1718 or 07825 171 446, [email protected]