Webb: We must remove burdensome pension regulation

Steve Webb, the Liberal Democrat pensions minister, has admitted that there areas of pensions regulation that are burdensome and cumbersome and “must be got rid of”.

Mr Webb added there was a burden on him not only to know all the various regulations but to be able to defend them and, if they were not defensible, to work out how best to reduce the red tape.

He said: “There are bits of regulation that are burdensome, cumbersome and need to be got rid of. Then again there are other things, such as the use of ETVs, where there are serious flaws that have not gone away.

“We are bringing out version one of a consultation paper into ETVs in May and are in discussion with bodies from the actuarial and accountancy professions, as well as the National Association of Pension Funds, to work out how we can change the rules to make things fairer.”

The pensions minister claimed the December consultation into what to do with small pension pots, which is still open for responses, is hoping to create a system where there is a “world of big fat pots”.

He said he envisaged a situation where people who once had many small pension savings dotted around various employers, or ‘lost’ as a result of firms being taken over, could consolidate all these into one large pot that would follow them round, “like a snail whose shell is getting bigger, or a rucksack that is getting filled up”.

Mr Webb said: “We still need to iron out all the details, which is why it is important that people respond to consultations. It is also important that the media does not just focus on one or two bad points.

“If 10,000 more people are put off saving because of a scary headline in the papers, that is extremely damaging.”

Mr Webb also hailed various work being done on auto-enrolment, claiming although the deadlines for bringing smaller schemes on board had been pushed back, there was still a lot of positive work being done to encourage employers and employees to opt-in and get a decent, fair pension.

He said: “We know there may be some small employers who try to discourage employees from a pension but we will be monitoring this as best we can, there will be a whistleblowing ability to flag people not playing by the rules.”

There will also be some freestanding market research conducted into why people have opted out, although “compulsion is not my Plan B”, the minister said.

The department for work and pensions is also involved in myriad other developments, such as working out concerns over levelling down, as well as trying to meet the ‘red-tape challenge’, cutting down the regulation that surrounds occupational pension schemes.

Mr Webb welcomed moves in the industry to make the open market option more visible to people and pledged support for industry against the excessive burdens that the European Union’s Solvency II may place on firms in Britain.

He said: “Solvency II is inappropriate for defined benefit schemes in Britain.”