The Government is under pressure to cut the minimum qualifying earnings level for automatic enrolment in half as part of a radical expansion of the flagship reforms.
Addressing MPs as part of a hearing on auto-enrolment this morning, Association of Consulting Actuaries chairman David Fairs said policymakers need to revisit existing limits to bring people on lower incomes into the scope of the rules.
Under existing legislation, only workers earning above £10,000 qualify for auto-enrolment, with contributions taken from earnings between £5,772 and £41,865.
Fairs said: “The self-employed are a critical area, but equally I think we need to look at groups like the low paid and women.
“At the moment under auto-enrolment, the first £5,800 don’t have contributions paid on them. That threshold was introduced so that you would get a meaningful level of contributions beyond £5,800.
“But what we’re suggesting is that goes down to zero and therefore the £10,000 threshold could be reduced to £5,000.”
The proposal was backed by Citizens Advice.
Citizens Advice policy researcher Thomas Brooks says: “The two questions are do we want more people saving, and do we want the people who are saving to contribute more?
“Reducing the lower qualifying earnings would both bring more people and help those people already saving to save more without increasing the headline rate.
“That’s attractive from those two perspectives of bringing more people in, but also helping people to save more.”
Brooks also said self-employed workers could be brought into the system through their annual self-assessments on tax.
He said: “Every year you would be asked to opt-in or opt-out of pension contributions.
“We understand why they were excluded initially because there were more complexities and it wasn’t part of that tripartite deal with employees and employers.
“And the previous session talked about how maybe the 2017 review is too soon to learn some of the lessons from increasing contributions, but that would be a really good time to look at how we can bring in those self-employed.
“Now we’ve got it up and running for employees, we have 4.6 million people who aren’t eligible, so we need to look at how to bring them in as a matter of urgency.”