MPs launch auto-enrolment inquiry
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The Work and Pensions select committee has launched an inquiry into pension auto-enrolment which will cover provision of advice and the possible impact of opt-out rates.
Changes introduced in 2008 will see every employer automatically enrolled into a pension with the scheme being rolled out from October 2012.
The terms of reference for the inquiry include the Department for Work and Pension’s communication strategy for introducing auto-enrolment and provision of advice and support to employers and employees, National Employment Savings Trust’s investment strategy and possible measures to reduce the number of small pension pots.
It will also cover opt-out rates, the possible impact on Nest if the numbers of auto-enrolled are significantly lower than predicted, whether or not auto-enrolment is likely to attract new providers and encourage new models of provision and if it will succeed in increasing how much people save for their retirement.
The deadline for written submissions is August 26.
Aegon regulatory strategy manager Kate Smith says: “It’s vital automatic enrolment delivers a step change in people’s savings habits. Getting the legislation in place is only the start of the story. We’re glad the Committee has decided to shine a light on some of the issues around automatic enrolment. In particular, there’s a real need for DWP and the Pensions Regulator to let employers and employees know this is coming and what it will mean for them. Pension providers have a role in this, but the government needs to take a positive lead in getting these messages across.”
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Readers' comments (3)
Anonymous | 8 Jul 2011 1:50 pm
Auto enrollment will never work. People will quickly find out how to opt out if it costs them Money they don't want to pay. Emloyees will all get together and find out which form to sign. It's not about lack of inertia, it really is about a lack of disposable income, and it won't work or be Trusted.
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David Prior | 8 Jul 2011 2:35 pm
NEST will also kill long-term pension planning off - advisers will have little incentive or reason to discuss retirement objectives, there will be no life office share of the market and goals will be missed by a country mile by the majority, with the few who can afford access to advice having proper structured plans in place.
I can't remember the last time I set up a regular premium pension - with no initial commission available and people not prepared to pay fees, like everyone else in the industry, our business focuses on high-net worth clients with capital sums to invest, so we can achieve an income to cover the Regulatory fees and increasing costs.
The majority will not seek advice - believing "I'm in a pension" without understanding that 8% of a limited band of earnings will not produce an income they can live on - especially for those with 25 years or less accumulation in it - it will be many years before any difference is achieved and this prognosis ignores the inevitable opt outs, which we all know will be higher than they forecast.
Even if someone comes to us, they will not pay for the advice to add an extra £100 pm into a PPP to top up their NEST contributions
I wonder what will come after NEST - will any Government be brave enough to make contributions compulsory?
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Nick Bamford | 8 Jul 2011 4:44 pm
Cart and Horse spring to mind! Really shouldn't this have all been done at a very much earlier stage. Surely it is the kind of data that you check out before you decide to do something?
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