Planning for the long term

Planning for the long term

LONG-TERM SAVINGS Dr Yvonne Braun, Director of Policy, Long-Term Savings and Protection, outlines the ABIs work on the Pensions Dashboards project, gives an update on advice and guidance to customers, and explains how a grime MC helped boost the nations Pension Attention. What does a grime MC have to do with pensions? Although workplace pension participation levels have never been higher, engagement with pensions is still low. More than half the public struggle to find their pension information and only 20% are confident theyre saving enough for retirement. So, in collaboration with the Pension and Lifetime Savings Association (PLSA), we recruited grime artist and chef Big Zuu to convince people to pay more attention to the issue through his enormous energy and infectious personality. The #PensionAttention campaign is significant because it brings together many providers with the shared aim of driving engagement. Essentially, we want to spark conversation among friends and families, and get people to understand how powerful pension savings can be in giving them freedom when they retire. The campaign has already been hugely successful in raising the volume on pensions, with a reach of more than 28 million people and evidence that people have taken action as a result. Weve also seen great support and endorsement from across the sector, policy-makers, including DWP, and employers. But this is just the start; well continue to build on this platform to boost engagement over the coming years. Whats the latest on Pensions Dashboards? The idea of Pensions Dashboards has been around for some time but took off in 2016/17 when we convened and led a cross-industry project reporting to the Treasury. Its a simple idea: when launched, dashboards will allow people to see all of their pensions in one place. There are an estimated 2.8 million forgotten pensions out there, worth around 27 billion. Especially in the context of the cost-of-living crisis, we are evangelical about the positive impact this project will have on society. Ive always seen Automatic Enrolment as a very smart way of getting around peoples dislike of planning for the long term. It has been fantastically successful, with more than 10 million people now enrolled in workplace pension schemes How is the ABI driving forwards the Pensions Dashboards initiative? Weve been the lead industry organisation on this project, bringing our members together with government, technical partners and other bodies. Our work has been informed by research undertaken by BritainThinks on our behalf, and by careful consideration about how other countries approach Pensions Dashboards. Weve already delivered a prototype dashboard, and our recommendations for implementing Pensions Dashboards have largely been adopted in legislation and regulations laid down this autumn. Our priorities are now to make sure that the data that goes into the dashboards is available on time, and that the rules around this are clear and realistic. The next key deadline is August next year, at which point data will be connected to the first dashboards, with a rollout to the general public likely happening in 2024. How can customers get better access to advice and guidance? For years, weve made the case that access to financial advice and guidance needs to be improved, particularly around pensions. Although the Money and Pension Service (MaPS) does good work through its brands MoneyHelper and Pension Wise, they dont go far enough. Research suggests that only about 8% of people receive financial advice, so were in a real haves and have-nots situation. At present, the rules around giving advice are so restrictive and ambiguous that providers are reluctant to offer more than the most basic help. Any guidance tailored to a particular individual can be interpreted as advice, which comes with a higher regulatory bar. What is the ABI doing to address this problem? Were calling for amendments to the rules that would allow providers to do more to support their customers. To this end, we have engaged with the Financial Conduct Authority (FCA) around the more incremental steps we can take to change their rules. Weve also raised the issue with government and parliament, making the case for more fundamental change. This two-pronged approach has paid off and, as a result of our engagement, the FCA recently announced a holistic review of the advice boundary. Our current priority is continuing to work with the FCA to ensure the review is indeed holistic and solves problems in the short term, while encouraging other bodies such as the Treasury to get involved in the review. As we mark 10 years of Automatic Enrolment, what do you think the key achievements have been? Automatic Enrolment (AE) is a scheme, backed up by legislation, that compels employers to set up a workplace pension for their employees. It applies to all employees earning more than 10,000 and aged over 22. Currently, employers are required to pay 3% of earnings into the pension, while employees have to pay 5%. The initiative was introduced because pension participation in the UK had fallen quite considerably. Ive always seen AE as a very smart way of getting around peoples dislike of planning for the long term. It has been fantastically successful, with more than 10 million people now enrolled in workplace pension schemes. Celebrating 10 years of Auto Enrolment: ABIs Hannah Gurga, Alex Burghart MP and Avivas Emma Douglas How has the ABI been working to shape the next 10 years? The ABI has a long history of supporting the implementation of AE. We have marked this anniversary by publishing a report Automatic Enrolment: What will the next decade bring? setting out the key achievements and laying out recommendations for government to further develop the scheme and enhance its impact for savers. We believe its essential to keep developing AE policy to make sure that people working today can have the retirement they expect. To this end, we want to see the government implement the recommendations from the 2017 AE review. This would mean that eligible employees would start saving into a pension from the age of 18 and all their earnings would count towards pension contributions. We would also like to see the minimum contribution rates rise to 12% over the next decade, with the added flexibility to opt up or down. We continue to emphasise the need for consensus across the political spectrum and, to this end, worked with the Fabian Society to produce a report, Good Pensions for All, to inform Labour Party policy development on pensions and savings for its next manifesto.