Steve Webb fears poor rap for pensions

The Pensions Minister, who said the government is going to use employers to promote pensions and auto-enrolment, described auto-enrolment as being like a Ming vase – “very precious, but very fragile”.

He added he wants to change perceptions and instil confidence in retirement planning to ensure that charges are not too high and that pensions offer value for money.

He said: “We need to move from a system that’s fiendishly complicated, that still leaves millions of pensioners living in poverty, to one, ideally, where we have a single, simple, decent state pension on which people can build.”

His comments were released by Saga following his chat with the charity’s director general Ros Altmann.

Mr Webb also took the opportunity to say that the Government will rely on employers to promote auto enrolment.

The Minister explained that his department and The Pensions Regulator would provide employers with the best tools possible and the department for work and pensions will provide employers with “market tested specimen literature that communicates pensions in plain language and explains what auto enrolment is”.

It plans to spend £10m on communications to make the scheme a success.

The Pensions Advisory Service will also be expected to play an increasing role in communicating about pensions.

Dr Altmann also questioned the minister on his change of heart on early access to pensions since being in Government. Mr Webb was previously in favour of unlocking pensions early but following a recent consultation, he said there was a noticeable lack of support for this and he was worried that people “would blow their pension pot”.

He said accessing pension pots early would “fundamentally change the nature of the product” and that now isn’t the right time with auto-enrolment starting next year.

He also said quantitative easing has damaged pensions. When asked about concerns over annuity risk given low interest rates and quantitative easing, the Minister admitted to “an issue about volatility, not knowing what you are going to get and an issue about poor returns.”