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2014 could be the year the tide turns for the pensions industry, minister says

The next year will be a critical turning point for the pensions industry, if it can rise to the challenge and avoid scandals, pensions minister Steve Webb (pictured) said yesterday.

Speaking at the National Association of Pensions Funds' (NAPF) annual conference yesterday in Manchester, Webb said 2014 could be the year "the tide turns for pensions".

"Based on opt-out figures [for auto-enrolment], my glass is 90% full," he told delegates. "This is a once in a life-time opportunity to get pensions right."

In a speech that referenced the songs of musical Les Miserables, Webb said he was "dreaming a dream" of a scandal-free pensions industry and supported minimum quality standards for pensions schemes.

He also spoke out against consultancy charges that see workers pay more for their pensions, and implied that the Government would "get tough" on such charges.

"The tactic of squeezing a little bit more [out of consumers] might look like a good tactic, but it's not a good strategy," he said. "Add it all up and you get a lousy strategy and an industry with a bad reputation."

Webb also suggested that the Government might look at emulating parts of the Danish pension system, which is rated the best in the world. The Danish system consists of a public basic pension scheme, a means-tested supplementary pension benefit and fully funded, mandatory private schemes, run by large funds not individual companies. However Webb added the Government didn't want to impose "strict rules", rather offer more different kinds of models.

At a session earlier in the day, David Lunt, head of relationship management at public pension scheme NEST, said the industry was "surprised" at the low opt-out rates for auto-enrolment so far. "Before the introduction of auto-enrolment, individual employees didn't understand pensions properly," he said. "Now the success of the scheme means there's a better level of understanding."