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Webb: auto-enrolment can help pension industry clean up its act
by Brian Cantwell on Apr 24, 2013 at 09:24
The pensions industry should use auto-enrolment as an opportunity to clean up its act and regain the public’s trust, according to pensions minister Steve Webb.
Webb (pictured)said the pensions industry was often regarded as unclear and self-serving, and it should use the reform as a way to alter public perception.
‘I think the industry needs to recognise that time and again it has not been seen to be on the side of consumers, and that’s a terribly difficult reputation to shake off,’ he said.
‘If we have this vast auto-enrolment now and firms are not seen to have put consumers first, the damage it could do could be enormous.
‘It’s a chance to clean up its act basically. This is a chance to make a fresh start with a whole new set of customers.’
Auto-enrolment opt-out rates
Auto-enrolment began in October 2012 for companies with 120,000 or more employees, and small and medium-sized businesses will come under the reforms from the end of 2013 onwards.
The reform has been broadly welcomed: it has certainly been given an easier ride than Webb’s other flagship policy, a flat-rate state pension, but its critics have pointed out it can only be judged a success if it maintains low opt-out rates.
Webb said information from employers so far suggested an opt-out rate of between 10% and 15%, which was within the Department for Work and Pensions (DWP) expectations.
If auto-enrolment engaged consumers in pensions, and led to a more transparent and cheaper pensions market, it would achieve two of Webb’s aims at once.
Naming and shaming
In October 2012, Webb pledged to ‘name and shame’ pension providers who allowed auto-enrolment into ‘lousy, high-charging old schemes’. At the same time he said he would praise providers who enrolled members into low-charging well-run schemes.
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