Former pensions minister and LCP partner Steve Webb has labelled the recent Budget a catastrophe for auto-enrolment by blocking the next step towards increasing contributions.
Webb was speaking at the Corporate Adviser master trust conference in London this week.
He said that the method by which the government raised employer national insurance has proved particularly damaging not just because of the increase by 1.2% from 13.8% to 15% from 2025, but the decision to reduce the level of salary at which NI kicks in from £9,000 to £5,000.
It means that the removal of the lower earnings threshold and the reduction in the auto-enrolment age from 21 to 18 recommended in 2017 and already enabled by legislation is very unlikely to happen stymieing other progress on contributions.
Webb said: “I think the Budget was catastrophic, particularly the way the NI increase was levied particularly on low-paid workers disproportionately. They needed £25bn. They could have brought the rate in at £9000. Instead, they chose to take it down to £5,000. What does the 2017 review do? Disproportionately increases the contribution on lower paid workers. The next step on AE has been blocked. So, I don’t think extra AE money is going to solve this problem.”
