AJ Bell press comment – 20 September 2022
- Pensions minister Guy Opperman has confirmed he has not been asked to continue in the role under Prime Minister Liz Truss (Guy Opperman on Twitter: "Now mourning is over I wrote a letter of thanks as departing after 5 years as Minister at DWP. New PM and @Conservatives will continue to have my full support ? https://t.co/JzWzWUhENl" / Twitter)
- Opperman cites delivering automatic enrolment, pushing through pensions dashboards legislation and harnessing people’s retirement pots in the fight against climate change as key achievements
- Inflation will be the primary short-term challenge for Opperman’s successor, with surging prices inevitably forcing some to re-evaluate their finances and capacity to save for the long-term
- From the backbenches Opperman plans to push for 1% ‘default workplace savings’ to boost financial resilience
- State pension age review also likely to be front-and-centre in 2023
Tom Selby, head of retirement policy at AJ Bell, comments:
“Guy Opperman has been a relatively rare phenomenon in modern political times – a pensions minister given sufficient time in the job to genuinely engage with retirement issues.
“He leaves office having pushed forward a huge legislative agenda, including shepherding automatic enrolment, laying the groundwork for pensions dashboards and driving improved climate disclosure in workplace pensions.
“While there will always be points of agreement and disagreement between industry and the relevant minister, Opperman was passionate, challenging and relentlessly focused on improving outcomes for savers. You can’t ask for much more than that.
“His successor will have a tough act to follow and enters the job at one of the most challenging times in recent history. Auto-enrolment faces arguably its biggest challenge, with rising prices squeezing household incomes and forcing millions to re-evaluate their finances – including their capacity to save for the long-term.
“Ensuring opt-outs are kept to a minimum will almost certainly be the main immediate priority for the next pensions minister. Over the medium-term the question of how to increase minimum contributions, without undermining participation, will need to be addressed.
“In his exit letter, Opperman also noted a desire to expand auto-enrolment to include a ‘rainy day’ element to boost financial resilience among workers – something which was brutally exposed by Covid and remains a huge challenge during the cost-of-living crisis.”
State pension age review
“Away from auto-enrolment and the existing reform agenda, Baroness Neville-Rolfe has confirmed she has now submitted her independent report into state pension age increases. This will be a huge focus for DWP and the new pensions minister in 2023.
“The report will help inform the Government’s decision as to whether future state pension age rises should go ahead as planned, taking into account various factors including life expectancy, socio-economic issues and the future affordability and sustainability of the state pension.
“The UK state pension age is 66, with an increase to 67 planned for 2028, and 68 by 2046. Way back in 2017 the Government said it would accelerate the rise to 68 by seven years to 2039, but this was never written into legislation.
“Recent data suggests life expectancy improvements have stalled, which should reduce the projected costs of paying state pensions to retirees. What that means for the state pension age will be a decision for Government and, inevitably, one that will be influenced by politics as much as economics.
“It would certainly be a brave move to enter a general election on a pledge to hike the state pension age further or faster than previously announced.”
