The government has failed to set out a timetable to implement key recommendations on improving auto-enrolment that were first made in a DWP report in 2017.
This report recommended enrolling workers from the age of 18, rather than 22 and applying a mandatory 8 per cent contribution on the whole of earnings up to a ceiling, rather than on the ‘qualifying’ earnings above a floor.
But in a parliamentary debate this morning pensions minister Guy Opperman, who supports these changes, said the timetable for implementing them “was still a matter for ongoing debate”.
LCP partner and former pensions minister Steve Webb described the comments as “hugely disappointing”. He adds that the 90-minute debate was an opportunity to announce concrete steps forward on these “modest” reforms which could boost the pension outcomes for many workers, particularly those on lower incomes.
The Department of Work and Pension said it was hoping to get a legislative slot in the 2022 or 2023 Queen’s Speech which would probably be the most likely route to getting the changes implemented, but Opperman said he could offer no guarantees on this timescale.
The Minister did say that he agreed that “8 per cent is not enough” and wanted to look at US experience on how to encourage savings beyond this level. He added that he also wanted to do more for the self-employed.
Webb adds: “It is a huge disappointment that more than four years after DWP published a widely accepted review of automatic enrolment we are still no nearer to seeing these modest changes implemented.
“The Government needs to realise the urgency of this issue. A whole generation of people who missed out on DB pensions and are only building up modest DC pensions could be set for a miserable retirement unless the pace of change is increased. Good intentions are no longer enough, we need action.”
Kate Smith, head of pensions at Aegon adds: “Implementing the 2017 review recommendations and extending its reach to include 18 to 21 year old’s will go some way to support the Government’s levelling up agenda. This allows this group to start saving earlier, and benefit from a valuable employer pension contribution. For this reason we’re supportive of this happening as soon as possible along with a plan to base auto-enrolment contributions from the first pound of earnings.
“Unfortunately, we still don’t have a timetable for implementing the 2017 review of auto-enrolment, as conversations are still ongoing across Government, but there’s a possibility that enabling legislation may be included in the Queen’s Speech in May. Until then we await with bated breath!”