Pensions Minister makes time for tea

26 October 2016

26 October 2016

With thanks to Stephanie Hawthorne, Editor of Pensions World for the following interview extracts:

Stephanie Hawthorne: What is at the top of your to-do list?

Richard Harrington: Continuing the auto-enrolment programme, which is at a very exciting and critical stage. We are looking in detail at defined benefit (DB) schemes and publishing a Green Paper in the winter to discuss what options are available, what our thinking is and what, if anything, the government can do.

Hawthorne: Would you like to see auto-enrolment extended to lower wage earners and the self-employed?

Harrington: I can’t say that it will happen in the near future, but the government has set up this complex machinery which seems to be encouraging, in terms of the small numbers opting out of it. It seems to me that in future we will be able to put other things under that umbrella. Personally, and we are not at this stage yet, it seems logical that we could extend this to other categories, in particular the self-employed on lower income levels without accountants and SIPPs. It is too early to say.

I think the advertising has sold the idea to a lot of people who haven’t previously thought about it. I am very impressed with NEST. I visited them quite recently. I’ve seen the products and the statements online. It is very user friendly. I would like to think it suits many self-employed people.

Hawthorne: Do you have any plans to change the triple lock on pensions?

Harrington: We are wedded to that until 2020. It is a clear commitment to 2020. If, as people say, inflation is going to rise, the triple lock will become more academic, as people will be protected by inflation and earnings.

Hawthorne: Would you like to see a single regulator for both occupational pensions and personal pensions?

Harrington: There was talk about it some years ago. We have plenty of irons in the fire on what we are doing. I am sure it will be looked at again in the future. There are compelling arguments both ways. I think first things first. At the moment, there is a lot going on with auto-enrolment, which is probably one of the biggest projects ever in the pensions world. Then we have pressure on DB schemes, some of which, at the worse end, the Regulator is looking into.

Hawthorne: Will the introduction of the Lifetime ISA harm auto-enrolment?

Harrington: I think it is a useful product to help with home ownership. I don’t think it competes in any way with pensions. I suppose there are two big steps in most people’s lives – the first when they purchase their own property and the second when they retire. I think it is right that the government should help with both things, which they do through the tax system. Obviously, the big difference is that the Lifetime ISA is more short term and the employer is not really involved in it, but both involve long term saving. The government’s policy is to try and promote that.

The full Ministerial Interview: Tea for two can be found at Pensions World.