NAPF blasts DWP for jeopardising auto-enrolment with state pension reform delay

The National Association of Pension Funds has attacked the government for jeopardising the launch of auto-enrolment by delaying until autumn the publishing of its white paper on a flat-rate state pension.

The government has admitted that the complexity of unravelling contracting out has delayed progress on the white paper, which will now be delivered in the autumn as auto-enrolment is getting underway, rather than in the spring as claimed by chancellor George Osborne in the Budget.

In a written statement published today, pensions minister Steve Webb says: “Given the scale, complexity and importance of these two significant reforms we are still working on the details, to ensure we get them right. Therefore, we will set out further detail on both the single tier reform and state pension age review mechanism in a white paper in the autumn.”

NAPF chief executive Joanne Segars has pointed out that the lack of a clear indication on how state pension reforms will be introduced threatens the success of auto-enrolment and gives DB schemes less time to adapt to whatever new rules are introduced.

Segars says: “It is good to see a clear direction of travel and confirmation that these important reforms will go ahead. But the time for talking should be over by now. We need to see these reforms become reality.

“Our State pension is one of the most complicated and least generous in Europe. The proposals for a simpler, flat-rate foundation pension are critical to the success of auto-enrolment. People need to know that it pays to save for their old age, and that they won’t see their saving means-tested away.

“The Government’s delay also means that pension schemes could be under more pressure to adapt to the new state pension. Defined benefit pension schemes need time to prepare for the end of contracting out. The Government must give them enough time and give them clarity as a matter of urgency.”

Saga director general Dr Ros Altmann says: “Radical reform of our pension system is vital and we welcome the commitment from Government to this agenda.
“The new pension system will hopefully be far better for women and self-employed, fairer and simpler than the current arrangements and should ensure much-reduced means testing.  It is a long overdue and much-needed change.
“But these are very difficult and complex issues and it is more important to get them right than to rush to release the White Paper before it is ready. The Government may also be looking at what to do about existing pensioners who will not be included in the new system and trying to work out the reaction of the public to these important reforms.”