Webb: pension reform far from over

The public response has beaten all expectations, with around nine out of 10 workers so far having opted to stay enrolled and keep saving for their retirement.

There is more to do before we can truly say we have created the new pensions landscape in this country that our children and grandchildren deserve

For the first time in more than five decades, it looks as if a government will be reaching the end of a parliament with the world of pensions in a better state than at the beginning.

But while we have earned the right as a government to be proud of what we have achieved, our ambitious programme of pension reform is far from over.

As many readers will be aware, the next big step in the development of auto-enrolment will be making a reality our long-held ambition for people’s pension pots to automatically transfer with them as they move from employer to employer.

Today, the average UK worker can be expected to change jobs 11 times during their working lives. So we need to be alive to the inevitable side-effect of a successful rollout of auto-enrolment without this further reform: a potentially huge number of small, dormant and easily forgotten pension pots scattered across various providers.

Plus, of course, there are lots of changes happening across private pensions – not least the reforms introduced in the last Budget – which make it more important than ever for people to know exactly where their pots are.

The 2014 Pensions Act confirmed that a pot-follows-member system would be put in place, and since then I, along with officials at the Department for Work and Pensions, have been working with representatives from across the industry as we consider the finer details.

There are different options on the table, with varying pros and cons. One option we are looking at closely is a model in which an integrated network of databases and registers is administered by private sector firms.

Although the services could vary, these would be built to set, open standards. This option would have the advantage of driving down costs through encouraging a competitive market.

Of course, we want to move as quickly as possible – but what’s most important is getting this right. In short, we want to ensure we develop the model that is most effective, simple, secure and low cost – the model that will stand the test of time.

It has been extremely valuable to hear how the industry is already thinking about implementation of pot-follows-member. I am grateful for its constructive engagement and hope this positive dialogue can continue as we transform the policy into a reality.

Together, we in the world of pensions have achieved a lot in the past four years. But there is more to do before we can truly say we have created the new pensions landscape in this country that our children and grandchildren deserve.