1. Automatic enrolment will go ahead on time on 1 October 2012. Not that startlingly a prediction you may think, but right up to the last minute there is always the chance the Treasury will pull the plug on this initiative. Of course the bit we don’t know at the moment is the start dates for those firms with fewer than 3000 employees, and we should find that out from the DWP in the next few weeks. All we know at the moment is firms with fewer than 50 employees don’t face auto enrolment until May 2015 at the earliest. The fact the Government is willing to mess around with dates this close to lift off is ominous.
2. The opt out rate for automatic enrolment will top 35%. And that’s if we are lucky. It could top 40% or even 50%. My biggest concern is that the Government is just not putting enough ‘welly’ behind this. It’s one thing to build a vast bureaucratic structure, forcing employers to do something, it’s a whole different thing to convince people that pension saving is ‘A Good Thing’. It may only mean giving up 1% of their salary to start off with, but that might be a step too far for many, when the upside is so uncertain. Of course, we are yet to see exactly how the DWP plan on advertising automatic enrolment, but my gut instinct is newspaper ads with lego men just ain’t going to cut it.
3. Annuity rates will continue to fall. Don’t get me wrong. I don’t mean they will go down consistently throughout 2012 – there are bound to be upward movements as global economies (hopefully) recover. What I mean is that the overall trend continues downward driven by Solvency II, increasing longevity, and the gender directive. And with drawdown in the doldrums, there is going to be increased interest in how to get a decent income in retirement. That may mean putting off taking benefits, or considering other products such as investment-linked annuities.
4. The date state pension age will increase to 68 will be brought forward (from 2046). With the most recent announcements it seems inconceivable that state pension age will go up to 68, 20 years after the increase to 67. The question is whether the Government will be assured enough to make this announcement this year. After all, there’s no real rush.
5. Open market option will get a ‘shot in the arm’. The ABI is currently consulting on changes to wake-up packs which should give the client a lot more hand-holding through the whole process, as well as highlighting the substantial benefits of shopping around. The $64m question is whether it goes far enough. And no doubt there will those who will be champing at the bit for OMO to become the default. But before that happens, we should at least be confident the vast majority will know what to do with that choice if it’s forced upon them. And at the moment, I believe, sadly, too few even understand the concept. There’s still a lot of work to do.
6. Steve Webb will continue in his role of pensions minister for the whole of 2012. Just as long as Nick Clegg can ‘work around’ his problems, disregard his principles, and cling on to power in the coalition. It would be a breath of fresh air to have the same pensions minister for more than 18 months, so I’m hoping this prediction comes true. It’s great just having someone in charge who gives a damn.
7. Manchester City will win the Premiership. Well, a girl has to keep the faith, doesn’t she?
Happy New Year!
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