The pension reforms, he said, would reduce the much of the need for means-tested benefits, and will ensure that increases to the basic state pension will not be outstripped by earnings, growth or inflation.
This means that pensioners are now £440 per year better off than they would have been had the state pension only been increased by average earnings since 2011.
In addition, the introduction of automatic enrolment will mean that up to 9 million people will be newly saving for their retirement, Gauke claims, increasing the amount being saved in workplace pensions by around £11 billion per year.
Automatic enrolment is already having an effect on pension trends, with the ONS recently reporting that the percentage of people paying in to a workplace pension in the private sector has increased for the first time since 2006.
DWP figures have also shown that automatic enrolment is continuing to play a major role in reversing the decade-long decline in private sector pension saving, with the changes already affecting over 4.7 million workers.
The National Association of Pension Funds found in their spring workplace survey that 28% of workers were more likely to save into a pension following the government's Budget announcements, with young people and those on lower incomes the most likely to do so.
David Gauke said:
"We are putting these reforms in place because we believe they are the right thing to do – that it is fair that people can make their own decisions about their own money. And we also hope that they will initiate a culture change.
"For years, we – and by “we”, I mean both policymakers and industry – have been scratching our heads over people’s lack of engagement with retirement.
"I’m quite clear that a key part of the government’s role is to maintain the conversation with experts from the industry.
"Our reforms will deliver a framework to allow savers the opportunity to make their own decisions – but the pensions and insurance industries are the vital link between the government and savers."
The government has already worked closely with industry experts in the 12-week consultation Freedom and Choice in Pensions, and The Taxation of Pensions Bill is currently at Committee Stage in the House of Commons. In addition, the Pension Schemes Bill, which delivers the regulatory changes needed to give effect to the reforms, including the guidance guarantee, has just completed Committee stage.
The tax Bill includes a number of changes designed to free up innovation in the retirement income market – including allowing annuities to decrease, and removing the ten year upper limit on guarantee periods for annuities.
Gauke continued:
"I am relaxed about the fact that there is much that the industry can do which we cannot – and a lot that you know which, frankly, we don’t.
"The industry knows its customers best. That allows you to play an important role in designing the detail of a system that really works.
"Your customers will be relying on that system to deliver choice and flexibility.
"While we, in consultation with industry, have designed the overall tax framework, we are aware that there is a lot more that sits beneath that, in terms of systems, in terms of products, in terms of how the new flexibilities actually work from the perspective of the people using them."
