I am pleased to announce today, two important steps to ensure millions of people have greater security in retirement.
A stronger pensions regulator
Today, the Government have published their response to the consultation “Protecting Defined Benefit Pension Schemes—A Stronger Pensions Regulator”. This outlined their approach, as set out in the 2018 White Paper, to strengthen, clarify and streamline the defined benefit pension system.
The Government will introduce two new criminal offences to prevent and penalise mismanagement of pension schemes.
The first will target individuals who wilfully or recklessly mishandle pension schemes, endangering workers’ pensions, by such things as chronic mismanagement of a business; or allowing huge unsustainable deficits to build up; or taking huge investment risks; or a combination thereof. We will introduce a new custodial sentence of up to seven years’ imprisonment or an unlimited fine for this offence. This brings the punishment in line with similar offences in financial services.
The second, which will attract an unlimited fine, will target individuals who fail to comply with a contribution notice, which is issued by the Pensions Regulator requiring a specified amount of money to be paid into the pension scheme by that individual. We will also introduce a new civil penalty of up to £1 million for this offence.
We have also provided an update on measures to strengthen the Regulator’s information-gathering powers, such as enhancing their interview and inspection powers previously announced in the White Paper.
The changes will build on the robust system that is already in place to protect defined benefit pension schemes, further protecting individuals’ pensions and ensure greater clarity for employers.
The Government’s full response to the consultation is available here:
Ten million workers automatically enrolled into pensions
Today we announce the milestone of 10 million workers having been automatically enrolled into a workplace pension.
Automatic enrolment is transforming the savings culture of this country by normalising workplace pension saving. It is enabling millions of workers to look forward to a more secure future and a better retirement.
Between 2012 and 2017, the proportion of eligible employees saving in a workplace pension rose from 55% to 84%. The private sector has seen the largest increases over this period, with participation rates almost equalising among eligible men and women in 2017. The increase has also been particularly marked among younger workers and those with low earnings. Among eligible employees aged 22 to 29 years, participation increased from 35% to 79%; and 76% of people earning £10,000 to £20,000 thousand are now saving, a rise of 42 percentage points since 2012.
Employers’ support is key to the success of automatic enrolment. In the last two years, thousands of small and micro employers have enrolled eligible workers into a pension for the first time. Automatic enrolment is now business as usual.
In addition, we brought in the first of the planned increases in minimum contribution rates, in April 2018, raising the overall minimum contribution level to 5%. From April 2019, the second planned increase, to a minimum 8%, will enable many workers to save even more.
The Government are committed to building on the 10 million milestone to support more workers, no matter what job, to save for a better retirement.