Pensions minister Steve Webb warned insurers against selling ‘dodgy old schemes’ to the thousands of employers who are due to auto enrol workers over the next few years.
Speaking at the NAPF conference in Liverpool, the minister said that he would ‘name and shame’ insurers auto enrolling workers into legacy pension schemes with high costs and poor quality standards.
But he applauded insurer, Aviva, which has pledged not to do so and said he had crossed Aviva’s name off a ‘little list’ he held of offending insurers. “I’m not setting a deadline, but let’s see how long it takes to cross everyone off.”
The Minister’s comments follow a report last week by the Pensions Institute which warned that use of legacy schemes with rip-off charges could undermine auto enrolment and cause a future mis-selling scandal.
He said he backed a system of kite-marking good quality schemes, so that employers and workers could identify which schemes were worth investing in.
Webb defended his policy of “pot follows member” as a means for workers to consolidate auto-enrolled pensions when they move jobs. The NAPF, which supports the idea of a ‘central aggregator’ for members’ legacy pots, attacked the ‘pot follows member’ policy earlier this week.
He said that the risk of workers consolidating legacy pots into inferior schemes could be reduced if the pensions industry avoided using low quality pensions for auto enrolment.
Elsewhere in his speech, Webb said the government would launch three consultations on pensions before Christmas, including proposals for the reform of the state pension and the implementation of ‘defined ambition’ pensions.