Steve Webb sits down with Hannah Brenton to discuss presiding over a cultural shift in saving for retirement.
Inside Caxton House, two men and a woman are staring intently at the photos on the wall across from the front desk.
The faces of the Department for Work and Pension ministers beam down across the reception with Mark Hoban and Esther McVey attracting the most attention. Both appointed in David Cameron’s first major reshuffle the previous day, their smiling headshots have already replaced their predecessors.
Luckily for this interview, pensions minister Steve Webb’s picture remains in position. As I’m ushered into his office, Webb is clearly in a hurry to leave for a parliamentary vote in less than half an hour. I’ve barely breathed my question about auto-enrolment beginning in October before he chirps in with a cheery “finally”.
Auto-enrolment: it’s extraordinary social change
“I often joke in the DWP that we get glib about numbers with lots of zeros on,” he says with a smile. “But five to eight million people saving for the first time or saving more – it’s extraordinary social change. I often say everyone will know someone who’s been auto-enrolled.”
The roll-out of auto-enrolment began on 1 October. As the reform steps up a gear, it’s clear Webb has a strong sense of ownership and he’s quick to gush about its impact.
“What does success look like?” he muses. “People will be talking about it. For me one of the key things is people will see the employer contribution. ‘Why don’t I save into an ISA?’, ‘why don’t I put the money under the mat?’ – because the only place you get the guaranteed statutory employer contribution is in auto-enrolment. Fine, you can opt out, but you are giving up a pay rise. You’re sacrificing money that your employer is making available.”
Yet Webb couldn’t have asked for a worse economic climate to preside over a nationwide savings push. In a growing economy, workers would still choose to opt out, but now businesses and consumers are struggling before auto-enrolment makes further demands on their cash. Webb, however, says he is not too concerned.
“I think every person is a success if we can get them into auto-enrolment and of course we’ll be back in a few years if they say no because it’s not right for them now. We’ll be back, so I’m really very positive about it,” he says.
On the prospect of employers lowering contributions for existing schemes, he says levelling down is “almost the dog that didn’t bark.”
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