Laura Trott’s first year as Pensions Minister, or the best role in government as she describes it, has marked an incredibly busy year, with a storm of updates, reforms and reviews affecting the entire industry.

Reflecting back on her first year in the role, Trott said that she feels “very lucky to be in this job and to be able to try to make a difference”, emphasising that pension savings represent a “significant piece of people’s lives”.

“I think the thing that I'm most pleased with is getting the 2017 auto-enrolment (AE) reforms done,” she said. “That is something that needed to be got over the line and I'm delighted to have been able to do that.

“AE has been a fantastic success in terms of getting coverage, but what we need now is to make sure that that adequacy is in the right place, and so that's what the reforms are all about.

“What has mattered to me the most is people at the lower end of the income spectrum, making sure that they have as much as possible come retirement, and the 2017 AE reforms will make a difference to those people particularly.

“So I am absolutely delighted and I want to make sure we're getting on with rolling them out as quickly as possible. I hope the industry will have seen from my first year that I don't like to wait around, I like to get things done because what we're doing really matters.”

Shifting from coverage to adequacy

Calls from the industry to review the current minimum AE contributions are also being heard, as Trott confirmed that the government is planning to look into this issue.

“I think it's really important that we get the 2017 AE reforms actioned first because that is something that there is more consensus about and that hasn't been done for a number of years,” she continued.

“But there is a debate that we need to have about contribution levels because adequacy is really important.”

The industry will need to watch this space, as Trott confirmed that the government will be looking to share an update on what it plans to do next with automatic enrolment “in the coming weeks”.

However, Trott argued that structural changes are needed alongside this, emphasising that “if we're going to put more money in then we need to make sure that it's being put into a system that people have faith is working really hard for them”.

And steps to look into these broader changes are already underway, as the government previously announced a bumper package of reforms in January, and another bumper package of reforms in the summer.

Mansion House reforms and more

Trott said that whilst there has been “a lot of changes, they are all working together” and there is a “clear direction for where we’re trying to go”.

She continued: “It's about making sure that we are increasing the value that people are getting from their DC pension pot, so that savers have that greater adequacy at retirement.

“Value for money is absolutely crucial in that. We’ve put out a consultation response on that recently, and we’ll be talking about the next steps soon.

“It also means that we have to do a lot to address lost pots and small pots. We've got plans for the default consolidator, and we'll be saying a little bit more about that, as well as a little bit more about the direction of travel that we want to go to address that flow [of small and lost pots] as well.

“We also need to look at the structure of the industry in terms of accumulation and decumulation and how services and how they work, and making sure that people have equal access to those as well.

“Alongside this, we need to focus on DB, and making sure that DB is working in the right way for members, but also the economy.

“So there's a lot going on but it is all the things that you would have expected that I've signalled previously and so there is a clear direction of travel. I think the industry is clear in terms of where I'm trying to go and what I'm trying to achieve and so I will be relentless in pushing that forward.”

With so many reforms on the horizon, and an avalanche of consultations to respond to, some in the industry have expressed capacity concerns.

However, Trott said that the government is looking to set out a roadmap, exactly as industry experts have previously called for, confirming that industry views are being considered at every stage of the reforms.

“I have been trying to spend as much time as I can with industry to get their input on this because this is a shared mission, and this is something whereby we as an industry and as a government want people to have better retirements,” she stated.

“This is a journey that we're all on together and what is really nice about working with the pensions industry is there is a sense of shared mission.”

While Trott acknowledged that “not everyone is always going to agree with me”, she emphasised that “decisions have to be taken”.

“It is really important that the full ecosystem is taken into account here when we're making decisions, because it's about industry, but it's also about pension savers and we spend a lot of time as a department making sure we are engaging with both those groups,” she continued.

And the chance for further announcements seem likely, as when asked whether the pensions industry should expect further changes in the Autumn Statement, Trott stated: “I think you can expect to see pensions to maintain its place and prominence because there's a huge amount of work which is going on and it's really important work and it's something which is a priority for government.”

Supporting the under-pensioned

Debates around the state pension triple lock have been a key area of contention in recent months, and whilst Trott acknowledges the importance of the state pension for many savers, she argued that focus was also needed on boosting private pension saving.

“The state pension is the bedrock of people's retirement,” she stated. “We are committed to the triple lock, and there's a process that has to be gone through every year and that is happening at the moment.

“But I think what is really important is that we also we focus on boosting people's private pensions as well, because it is really crucial that people have a decent private pension as well as the state pensions so they can get the retirement that they want."

Trott suggested that building private pensions could also help address intergenerational tensions, stating that while the government has already taken steps to address the intergenerational divide, including through AE, “there is more that we need to do”.

Efforts to address the gender pensions gap are also underway, with the government’s first annual report on the gender pensions gap also published in Trott’s first year as Pensions Minister. And this is an area that the minister said she remains committed to, stating:
“We’ve taken steps since 2010, such as AE, which has been particularly beneficial for women, and we now have more [eligible] women saving into a private pension than men, just.

“But there's more that we can do in terms of adequacy, so that is something that I will continue to work on and to shine a light on because it's very important.”

When pressed on the broader social issues exacerbating the gender pensions gap, Trott also confirmed that “this is a whole government effort”, highlighting the recent childcare reforms as “crucial” in terms of enabling women to go back to work if that is what they wanted to do.

Further efforts are also underway in terms of addressing self-employed pension saving concerns, both regulatory and from within the industry, as Trott clarified that while “there is no easy fix”, “there is a lot of work going on” in this area.

DB Funding Code updates

Trott has also been working to progress legacy initiatives that were inherited from previous Pension Ministers, including the DB Funding Code.

When asked about some of the industry concerns around the restrictive aspects of the DB Funding Code, particularly on the productive finance agenda, Trott emphasised that “the final code has not yet been published”.

She stated: “I think it's really important on the DB Funding Code that we hear feedback from industry and take that into account, and that we ensure that all parts of government policy work together and that we are reinforcing the productive finance agenda throughout all kind of various pieces of work that we're doing in the pension space.”

Trott emphasises, however, that the “everything must be to members benefit”.

“My job is to advocate for pension savers and I would never do anything which I didn't think was in the best interest of pension savers,” she continued.

“I think it's widely recognised that there has been too much focus on cost and not enough focus on returns, so that that is the dial that we are shifting as a government.

“Now everyone has different jobs in government and the Treasury are obviously very focused on the economic impact of these things.

“But the two things go very much in hand in hand. Pension savers are the utmost of our thoughts and priorities and the project finance agenda does have some beneficial knock-on effects, but it's the interest of pension savers that we are focused on completely.”

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