Stephen Timms in conversation with Darren Philp and Nico Aspinall

In an innovative, interesting and informative session of DG publishing’s  DC Strategic Summit (2024), Stephen Timms delivered a keynote by way of a Q&A with Darren and Nico which will be published as their weekly podcast.

Although steeped in Labour politics, Timms’ current persona is apolitical, he is Chair of the Work and Pensions Committee which serves to commentate as an all-party group. So there was little overt criticism of Government in his 40 minute session. He expressed disappointment that auto-enrolment contribution rates had not risen beyond those prescribed at the outset of the problem and predicted that we would be in a “six and six”, world, where contributions would be split between employer and employee to match the 12% contribution rate in Australia.

He pointed out that the anticipated increase in contributions from members wanting to pay more had not materialised. Timms would not be drawn to answer to my question as to why people are flooding DWP helplines to pay more into the state pension , rather than fund their workplace pensions. At Darren Philp’s prompting , he – on behalf of the WPC – endorsed CDC , but with regards the further question “how can we make workplace pensions” as attractive to savers as the state pension, he could only suggest we improve workplace pension’s perception as “value for money”.

This is of course what the DWP are wanting to do, through TPR and FCA and we did hear more on progress towards implementing the plans for VFM later in the day (thank you Louise Davy).

Where perhaps Timms was able to step beyond his WPC Chair status was in calling for a review of progress so far, not to rip up the Pension Commission’s work , but to build on it. He spoke out against having another Pension Commission – his call for a review is in line with the Labour Party’s stated policy and I suspect that we will have one early in the next parliament. This will helpfully coincide with the review that the IFS is conducting into public and private pensions that may deliver roughly at the same time.

Where are DC pensions going?

It is hard to see where DC pensions going anywhere right now, but to continue to reap the benefits of auto-enrolment and move towards a more institutionalised , consolidated future where they become an engine for growth, not just in people’s retirement security, but in the nation’s economy.

Timms pointed out that in recent evidence to the WPC, The British Venture Capital Association had stated that more money was invested through British VC firms from Sweden , than from British investors.

Timms also reiterated the WPC’s call on Government to make better use of the national insurance collection system to offer auto-enrolment to the self-employed whose savings rates have plummeted since the arrival of auto-enrolment. He may be aware that 2012 marked not only the advent of AE but the implementation of RDR. I suspect that the decline in self-employed pension contributions may be linked to the end of commission based pension advice, the self-employed have had no one to sell to them.

Which reminds us that AE is not just delivering on “sales”, but also on value. We are now getting the same investment product as we were prior to 2012 but at a fraction of the cost.

The conversation ended with a discussion about advice and guidance in which Timms lamented that , despite high net promoter scores, Pension Wise remained unloved and unused by the majority of those for whom it is eligible.

There seems no shortage of interest in pensions, judging by viewing figures for Martin Lewis’ “pension specials”, the trouble for private pensions is that all Lewis’ viewers seem interested in , is the pension from the state pension.

If we are to ask the question “where are pensions going“, Martin Lewis might be a good person to ask it.