Avoid enrolment in 'poor' pensions
Published on 05 December 2012 02:00 PM
Workers should not be automatically-enrolled into pension schemes offering poor value for money, the Pensions Regulator has said.
The regulator's plans to steer employers away from enrolling their workers into poor-quality schemes has been welcomed by Pensions Minister Steve Webb.
And their comments have been echoed by the National Association of Pension Funds (NAPF), whose chief executive said it was pointless enrolling people into a 'bad pension'.
No to poor schemes
Pensions Regulator chairman Michael O'Higgins told the NAPF's London conference that employees should not be automatically enrolled into smaller pension schemes that were poorly run, did not benefit from economies of scale and made charges that did not represent value for money.
Speaking at the conference, Mr O'Higgins added that employers also shouldn't automatically enrol workers into older schemes whose higher administration charges took their toll on pension pots.
The Pensions Regulator has suggested taking a voluntary approach that could see schemes submit annual reports to help employers, workers and the regulator assess how well governed they are.
Launched in October and starting with employees working for larger firms, the Government's automatic enrolment scheme will eventually see up to 10 million workers put into workplace pension schemes.
Commenting on the regulator's plans Mr Webb said: 'We support the Pensions Regulator's work to ensure people are automatically enrolled into high-quality, well-governed pension schemes.'
Quality is everything for success of auto-enrolment
He said the quality of schemes was crucial to achieving the objectives of auto-enrolment, adding that there much that could be done to 'reinvigorate' workplace pensions.
The minister said he looked forward to working with the regulator to help employers and workers make the right choices while ensuring providers offered 'the best possible pension products with the lowest possible costs'.
Joanne Segars, the NAPF's chief executive, said: 'There is no point in bringing people into a bad pension.'
She said her organisation shared the regulator's worries about some schemes' economies of scale and the value for money they offered as they wanted all workers to be automatically enrolled into high-quality pensions.
Copyright Press Association 2012