Home > News > 2011 > December 2011 > Malcolm McLean speaks at the NAPF Scottish Group Event
Malcolm McLean speaks at the NAPF Scottish Group Event
Speaking at the National Association of Pension Funds Scottish Group Event in Edinburgh today, Barnett Waddingham consultant Malcolm McLean commended the Coalition Government for all the pension reforms it had initiated in the relatively short time since coming to office. He was disappointed, however, with the recently announced changes to the timetable for the full take-on of auto-enrolment and felt there was still more that could be done more broadly to sustain and encourage voluntary saving.
He said:
“The introduction of auto-enrolment next year is obviously a key change in the pensions landscape and is an important and necessary step in addressing the long term problems (both social and financial) this country faces in the light of an ageing population and a growing savings gap.
“Whilst pleased that the Government has this week confirmed that A/R for the biggest employers will begin as planned in October 2012, I along with many others was extremely disappointed about other delays in the timetable – particularly the decision to push back the staging date for the smallest employers (under 50 employees) until after the next election in 2015.
“I consider that to be short sighted in the extreme. One of the main perceived benefits of auto-enrolment – and certainly the raison d’être for the development of the NEST scheme – was to support and encourage private pension saving in low to medium earners, many of whom work for small employers and do not generally have access to an employer sponsored workplace pension arrangement.
“That is now not going to begin to happen in the case of small employers for another 3 years at least – some 10 years since the strategy was first mooted by the Turner Commission in 2005. Progress has been painfully slow.
“Be that as it may, under any scenario I believe there are some additional measures both the Government and the pensions industry could contemplate taking more immediately now alongside auto-enrolment to help facilitate a still largely voluntary system of private saving.
“These will include for the Government more financial support through the tax system for employer sponsors of workplace pension schemes, a simpler pension regime with less prescriptive regulation, better financial education and less statutory restrictions on the giving of advice to consumers.
“For the pensions industry, there is probably a need to project a more customer-friendly image with greater transparency in relation to products, charges and fees to help restore public confidence in pensions and those who provide them. The importance of constructing an appropriate default investment option for members in the post-2012 largely defined contribution pension world will also need to be emphasised.
“For a number of reasons it is desirable, in my view, to try to maintain for as long as possible a largely voluntary system of private saving - but in the event of auto-enrolment failing to deliver the requisite results (and the evidence for or against that should still be clear within 5 or so years of the roll-out beginning) there seems little alternative to the imposition of full compulsion with no right of opt outs for either employers or employees. This would clearly be a nettle which would be painful for any Government to grasp but one which may be essential in the long term interests of future generations of both pensioners and workers (taxpayers) alike.”
If you would like more information please email either Malcolm McLean or Steph Gold.