With chaos at the top, what does it mean for pensions?

Amid the melee of ministerial resignation that took place this month, that of Guy Opperman, Pensions Minister, was one that caused alarm bells to ring.

Opperman is the longest serving Pensions Minister so far, and his move to leave his role could not have come at a worse time for the many pensions initiatives that are currently in train.

So, pension providers and other experts reacted with relief when Opperman was reappointed to “steady the pensions ship” until a new Prime Minister is in place.

Kate Smith, who runs the pension department at provider Aegon, says that the stability is welcome, at least for a few months.

Kate Smith, Head of Pensions at Aegon comments on Guy Opperman’s reappointment as Pensions Minister:

“This is good news for pensions with the Minister given more time to finish at least some of what he started, giving much needed continuity rather than disruption.

“Pensions policy is a hive of activity and it’s important that it remains on track.”

Opperman may be on borrowed time, however, with whoever takes over as Prime Minister possibly wanting to replace him. Here’s a run-down of the pensions changes that he is working on, and what change or a vacuum in the pension department might mean for savers.

Pensions Dashboard

What is it?

An ambitious plan that will allow individuals to access information about all of their pensions, including their state pension, in one place, so that they can make informed decisions about retirement.

What is happening?

Having these dashboards in place is a huge undertaking, and the government’s most recent update pushed the ‘staging date’ when the biggest pension trusts had to connect to the dashboard programme back by three months1.

Public sector pensions won’t be on board for far longer.

What does it mean for you?

Dashboards could make pension planning far easier, but it is taking a long time to implement this. Disruption in the DWP when a new Prime Minister comes along could further delay things.

Auto-enrolment expansion

What is it?

A plan to increase the scope for auto-enrolling people into pensions. At present employers only have to auto-enrol their employees into pensions if they are over 22 and earn more than £10,000.

What is happening?

Some bosses of large companies are in favour of an expansion2, while others are concerned about the impact on financial resilience during a cost-of-living crisis3.

The second reading of a private members bill in parliament this month sought to give the Government the chance to introduce auto-enrollment at a younger age and lower salary, when the time is right, according to Conservative MP Richard Holden, who is behind the bill4.

What does it mean for you?

Opperman is a fan of extending auto-enrolment and said earlier this month that he is committed to doing so ‘when the time is right . If he is replaced there may be less urgency on the matter. He is also a fan of increasing minimum contributions, a view that may not be shared by any successor.

Depending on your views on pension auto-enrolment, and how it affects future financial resilience, you may view this as good or bad news.

State pension underpayments

What is it?

Recently, a large number of people have been found to have been underpaid their state pensions, with many able to reclaim for underpayments.

Almost £1.5 billion has been underpaid, mainly to women who did not get the state pension entitlements offered when their husbands died.

What is happening?

The DWP is committed to putting things right5, but some of these underpayments won’t be returned until December 2024.

You can now request information about the pension of someone who has died if you are the next of kin or executor, at https://secure.dwp.gov.uk/request- -about-underpaid-state-pension-for-someone-who-has-died/contact-relationship.  

What does it mean for you?

If you are affected by the state pension underpayments, delays mean you will wait longer to get your money back.

2 https://www.ftadviser.com/pensions/2022/06/28/ae-levels-out-while-employers-seek-change-to-age-threshold/ 
3 https://www.ftadviser.com/pensions/2022/06/28/ae-levels-out-while-employers-seek-change-to-age-threshold/ 
4 https://www.ftadviser.com/pensions/2022/07/21/ae-bill-to-allow-new-rules-to-be-introduced-when-time-is-right/ 
5 https://www.pensions-expert.com/DC-Auto-enrolment/Opperman-AE-reforms-are-doable-by-2025