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Esther McVey must ensure current pension projects are not neglected and continue the success of auto-enrolment (AE) as a priority, industry commentators say.

McVey was appointed as secretary of state for work and pensions on Monday but there is concern among some that the Department for Work and Pensions' (DWP) other areas of policy will take up the majority of her time.

While employment and disabilities have ministers of state, the second highest departmental ministerial role, pensions has just an under-secretary of state, the most junior of ministerial titles.

Royal London director of policy and former pensions minister Sir Steve Webb believes McVey may find it difficult to focus on pensions, particularly if her past experience as disabilities minister and employment minister inform her position.

"The DWP could choose two ministers of state, and it gave one to employment and one to disability, and said pensions was a junior post," he said. "That tells you what the department's priorities are.

"All the natural gravitational pull of the Esther McVey role will be towards employment and disability. I imagine that she won't spend a lot of her waking hours thinking about pensions."

For this reason, he said, although the defined benefit (DB) white paper may be delayed by a small amount of time, McVey is unlikely to make any major amendments to it. Likewise, reform of the AE regime is also unlikely to pick up speed, he predicted.

Ongoing work

However, with AE having been one of the DWP's flagship programmes over the past five years, culminating in a wide-ranging review published last month, it is also important that this momentum is not lost.

Society of Pension Professionals president Hugh Nolan stated he hoped the DWP continued on its "roadmap" for the regime.

"The key is AE and building on that success," he said. "McVey has to continue to push on that front, get as many people enrolled and saving for pensions as can be done, and slowly building up so people understand better what they need and get the best benefits they can to live a decent retirement."

The People's Pension director of policy and market engagement Darren Philp agreed, and added McVey should drive some "added impetus" on questions around multiple job owners, the self-employed, and younger workers.

But he particularly pointed to the upcoming increase in total contribution rates, which will this April more than double from 2% to 5%.

"One of the things that the department will need to do is have a proper evaluation. It needs to be really on the money in terms of understanding what impact that has on opt outs and participation.

"I'd really like the DWP to make sure they're totally on top of gathering the evidence of that so we can be best prepared to deal with any consequences."

And with the DWP having taken over the pensions dashboard project in October, with further updates and information expected in the spring, Philp commented it was important for current work to be driven forward "with energy and enthusiasm".

"I would like to see from the secretary of state a real focus on the consumer and how we can open up pensions and make the dashboard work. But also how we can do it in a safe but innovative way to really make the most of the opportunity."

Indexation

But Nolan also hoped McVey would tackle some of the more controversial issues, particularly in terms of the funding problems many DB schemes are experiencing.

"I am constantly talking to clients about the stress of funding their DB schemes," he continued. "I see a major unfairness in the fact the state changed the rules for themselves to move to the Consumer Prices Index from the Retail Prices Index. Half the DB schemes in the private sector got to move by accident, and half are stuck.

"I cannot see that that is fair. When times were good for pension schemes, the government made rules that increase liabilities for everyone, but when times have been a bit tough, the government has made rules which have released some from a little bit of obligation but there are some that haven't got that relief. It just seems one-sided to me."

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