29 June 2004
Rt Hon Andrew Smith MP
Secretary of State for Work and Pensions
Pensions Information Pack launch
(CHECK AGAINST DELIVERY)
Good morning and welcome. We’re here to unveil the Pensions Information Pack.
I think you’ll agree this is a very positive development, for too long employers have been held back in promoting membership of good schemes. Generic advice like this is long overdue.
I’m delighted that so many of the consortium members are here today. I would like to thank you personally for all your hard work and recognise the enormous value – of your time and effort – that has been put into pulling together this high quality product.
I believe it will help employers fulfil their role in the pensions partnership, and – of course – increase employees understanding and awareness of the importance of good pension provision.
In the time I have available this morning I would like to stress the importance I place on this guide, and testing it in the workplace – as well as how it fits into our wider pensions strategy.
The background is well known. We’re all familiar with the challenges and opportunities associated with longevity.
Pensions in the UK are based on a partnership between Government, trade unions, employers, the financial services industry and individuals.
Since 1997 our first priority has been to raise the living standards of all pensioners, targeting extra resources on the poorest.
The second stage of reform – as set out in the Pensions Green Paper – looks at policy levers for making still more of a difference for tomorrow’s pensioners. Helping people to save more, or work longer (or indeed a combination of the two!) as they live longer, healthier lives.
There’s been a lot of activity in the last 18 months. We’ve had the Green Paper and the consultation period. Then in June, last year, I announced the first phase of our plan of action to increase security and simplify scheme administration.
Since then we have come forward with proposals to radically simplify the tax system, to increase the rewards for people who defer taking their State Pension, to drive forward the informed choice agenda on people’s need to plan for retirement.
And, of course, most recently, the Pensions Bill is currently going through the legislative scrutiny process in the House of Lords. (And I would like to thank you all for your input into the Bill process.)
As we move forwards, the workplace is key to this overall pensions strategy – especially as a route of delivering information.
We set out our plans for informed choice in February – starting from the premise that given the right opportunities and information, people will plan for their retirement sensibly, but that at the moment there were too many barriers to saving.
We made it clear that if we are going to influence savings behaviour, we would need to take action in three areas to:
- enable people to make the most of pension provision and encourage availability of the right pension products;
- raise people’s awareness of their options and improve financial education; and
- ensure that everyone has high-quality, accurate and timely information.
So, we are committed to a programme of not only increasing awareness of the need to plan, but furnishing individuals with the information they need to make informed choices.
In particular, we have now begun a programme of work to provide 1.6 million self-employed people with an automatic State Pension forecast.
Next year we will send automatic State Pension forecasts to 8 million people, with the aim of reaching out to all parts of society, especially those who do not have a workplace pension.
We have also listened to the needs of employers – and are taking action to work in partnership with them to give them more flexibility to support their employees in the decisions they make on pensions.
For example – we are exploring techniques such as automatic enrolment and US-style savings plans such as ‘Save More Tomorrow’, also known as SMarT, which are designed to overcome the inertia that too often prevents people from saving for retirement in the workplace.
The importance of this partnership working was underscored by the CBI in yesterday’s launch of ‘Raising the bar’ – in which they re-emphasised the importance of employers being able to communicate with their workers on options for retirement.
We are, of course, also focusing attention on how we can work with employers to help them give their employees more information about pensions.
The Pensions Information Pack is one of these initiatives – aimed at clear advice around what employers can and cannot say to employees.
In pulling together this pack the ABI have successfully led a coalition of key stakeholders, bringing together knowledge, experience and skills from a range of organisations – as well as drawing on their own experience of marketing savings products in the workplace.
The results are excellent.
The task now is to work together to test this pack in the workplace pilot study that’s about to begin with the employers that have been recruited (and, of course, there’s still time for more to sign up so we’d appreciate your continued help with this).
We want to learn more about the experiences of those involved in the pilots – employers, employees, and of course you, our pilot partners – so that together we can shape any future regulations. And have a better understanding of the main issues facing different stakeholders in providing or receiving workplace information and advice.
We also want feedback so that we can assess the business impact of providing information and advice, particularly the impact on smaller employers – so that we can get the right balance and ensure that employees working for small firms get the information they need, as well as ensuring that the regulation burden is proportionate and effective.
And we want to find out more about what kinds of information and advice make a real difference in terms of raising pensions awareness and helping people make informed decisions about what to save and when.
So, alongside the pack we’ll also be testing the effectiveness of:
- presentations to groups of employees by pension providers;
- 1:1 meetings for employees with pension providers to discuss pensions information, and
- 1:1 meetings for employees with Independent Financial Advisers involving pensions-specific advice.
To conclude my remarks this morning – I’m very pleased to welcome you all here and have the opportunity to thank you all for both your help in getting us to this point, and also to those of you who will be involved in testing the proposals in the workplace.
I want to get to a position where everyone has the opportunity to get a pension, or at the very least decent pension information and advice through the workplace.
This pack is a key step to getting us closer to that ambition.
I will now handover to Ruth Kelly, who will say a bit more about the rules that govern what employers can and can’t say to their employees about pensions.
As well as what we’re doing to try to ensure that those rules strike the right balance between protecting consumers adequately and allowing employers to give their employees the vital information they need to plan for their retirement.