Speaking last week in London at a Financial Times Live event, called Leadership of DC Pensions, the pensions minister said he stood by his belief that inertia will drive the success of auto-enrolment.
He said: “The reality is the average 20 or 30 year old is not going to be engaged with their pension which is why auto-enrolment relies on inertia and I stand by that.”
Mr Webb said that although the March Budget had promoted advice, with everyone at retirement being given the option of getting independent help with their finances, he said how advice would look was yet to be seen.
He said that not everyone would want face-to-face advice, with many choosing “to get their information in other ways”.
Mr Webb added: “Guidance is not an event, it is a process of engagement that has to be ongoing.”
However, speaking at the same event, Labour’s Gregg McClymont, shadow pensions minister, accused Mr Webb of being “elusive” about why government was relying on apathy to justify auto-enrolment but assuming people would be actively engaged at retirement.
He said: “We all have to welcome the government getting the building blocks of change underway but there is, to put it politely, a potential tension between the philosophy of relying on inertia that sits behind auto-enrolment and giving people freedom at retirement. If we put efficiency alongside freedom then we’re more likely to have a balanced debate. We all want security for pensions but that means efficiency and freedom.”
During the event, Mr McClymont also criticised the way the government had promoted guidance over annuities, and how it had not answered questions about how access to pensions would interact with means-tested benefits.
Stephen Griffiths, financial planner at Kent-based Evolve Financial Planning, said: The changes were a huge surprise, but in fairness it’s not the sort of thing they could have discussed in advance much, since it would have been leaked. They are now consulting and the extra flexibility will be welcome. It flags the huge need there is for advice.”